S&P 500 futures and Nasdaq 100 futures erased earlier gains and turned lower on Tuesday. The move came as the Federal Reserve began its two-day policy meeting, the first under new Chairman Kevin Warsh. European stocks edged higher, with the STOXX 600 up 0.3%, as a preliminary US-Iran agreement boosted sentiment.
S&P 500 futures turned lower on Tuesday, diverging from European stocks that gained 0.3%, as the Federal Reserve began its first policy meeting under new Chairman Kevin Warsh.
The WSJ reported Monday that Warsh has questioned the central bank's emphasis on forward guidance, given what he views as its poor track record in economic forecasting.
European equities rose 0.3%, with the STOXX 600 edging higher as investors assessed a preliminary US-Iran agreement that could reopen the Strait of Hormuz and ease global oil supply concerns. Oil prices continued to fall, supporting expectations of easing inflation pressures. The European Central Bank recently raised rates, while the Bank of England is also due to announce its decision later this week.
The Fed's two-day meeting marks a new era under Warsh, who has indicated a potential shift away from the central bank's open communication policy. Markets are not pricing any rate changes this week but have one or more rate hikes baked in before year-end, according to the WSJ. The decision is due Wednesday.
The reversal in futures follows a period of gains earlier in the session, with the S&P 500 and Nasdaq 100 both turning negative in afternoon trading. The broader market is navigating a complex backdrop of shifting Fed policy expectations, geopolitical developments, and cross-currents from global central bank actions.
The preliminary US-Iran agreement, which could reopen the Strait of Hormuz, has weighed on oil prices and supported broader risk appetite in European markets. However, US equity futures failed to sustain the positive momentum as attention turned to the Fed's policy outlook.
This article is for informational purposes only and does not constitute investment advice.
