After the major U.S. stock average index fell sharply on the first loss-making regular trading day this year, stock futures trading was light on Thursday morning.
The Dow Jones Industrial Average futures fell 6 points, or 0.02%. S&P 500 index futures rose 0.05%, and Nasdaq 100 index futures rose 0.02%.
Minutes of the Fed’s December Meeting It was revealed that the central bank discussed another measure to reduce its balance sheet to actively reduce its loose monetary policy during the pandemic.
The Fed plans to reduce its holdings of U.S. Treasury bonds and mortgage-backed securities because it is already scaling back bond purchases and is preparing to raise interest rates after the reduction ends.
The minutes of the meeting stated: “Almost all participants agreed that it may be appropriate to initiate balance sheet runoff at some point after the first increase in the target range of the federal funds rate.”
After the meeting minutes were released, the stock market fell. The blue chip Dow Jones Industrial Average closed down 392.54 points or 1.07% after hitting an intraday record earlier in the session. The Standard & Poor’s 500 Index fell 1.94%. The Nasdaq index, which is dominated by technology stocks, recorded its biggest one-day drop since February, down 3.34%.
Kathy Jones, head of fixed income at Charles Schwab, said: “If you ride the liquidity wave and the liquidity starts to disappear, I don’t think it’s surprising that you will see the reaction.”
“This year we will transition from an extremely loose monetary policy and fiscal policy to a less loose monetary policy and a less expansionary fiscal policy. This must have some impact on risky assets that have risen due to such a low discount rate,” Jones added.
All 11 sectors of the Standard & Poor’s 500 Index fell on Wednesday’s trading day.
In terms of data, the weekly report on the number of initial jobless claims is scheduled to be released on Thursday morning.
— Jeff Cox of CNBC contributed to this report.