Dow futures edged higher in early trading Thursday after the major U.S. stock averages fell sharply in the first losing regular trading session of the year.
Futures on the Dow Jones Industrial Average gained 66 points, or 0.17%. S&P 500 futures rose 0.17% and Nasdaq 100 futures declined slightly.
Minutes from the Federal Reserve’s December meeting revealed the central bank is getting ready to remove its economic help more more quickly than anticipated. Officials discussed reducing the Fed’s balance sheet in another move to dial back its pandemic-era easy monetary policy.
The Fed’s plan to reduce the number of Treasurys and mortgage-backed securities it holds comes as it is already tapering its bond purchases and is set to hike interest rates after the taper concludes.
“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the minutes stated.
Stocks slid following the release of the minutes. The blue-chip Dow Jones Industrial Average closed 392.54 points, or 1.07%, lower after hitting an intraday record earlier in the session. The S&P 500 fell 1.94%. The tech-heavy Nasdaq saw its biggest one-day loss since February, losing 3.34%.
“If you ride a wave of liquidity to the upside and that liquidity starts to go away, I don’t think it’s terribly surprising that you’re going to see a reaction,” said Kathy Jones, head of fixed income at Charles Schwab.
“This was the year we were going to transition from extremely easy monetary policy and fiscal policy to less easy monetary and less expansive fiscal policy. That has to have some impact on risk assets that have risen because the discount rate was so low,” Jones added.
All 11 S&P 500 sectors fell in Wednesday’s session.
Investors await quarterly earnings reports from Walgreens Boots Alliance and Bed Bath & Beyond before the bell Thursday.
On the data front, the weekly jobless claims report is slated for released Thursday morning. Economists surveyed by Dow Jones expect that claims totaled 195,000 for the week ended Jan. 1. Trade balance data is also due, with economists looking for the deficit in goods and services to total $81.5 billion.
The releases come a day ahead of the Labor Department’s key nonfarm payrolls report, which is expected to show that the economy added 422,000 jobs in December. However, payroll processing firm ADP reported Wednesday that companies added a much higher-than-expected 807,000 positions for the month, indicating a possible upside surprise to Friday’s count from the department’s Bureau of Labor Statistics.
–CNBC’s Jeff Cox contributed to this report.
