US pre-open: Futures flat as Powell heads to the House

Wall Street futures were pointing to a flat open ahead of the bell on Wednesday as Federal Reserve chairman Jerome Powell prepares for another day on Capitol Hill.

As of 1240 GMT, Dow Jones futures were down 0.02%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.04% and 0.01% firmer, respectively.

The Dow closed a whopping 574.98 lower on Tuesday, easily erasing the previous session's modest gains.

Yesterday's heavy selloff came after comments from Federal Reserve chairman Jerome Powell before the Senate, where he cautioned that the central bank's terminal rate would likely now have to be raised even higher than previously thought as a result of stubbornly high economic data over the last few weeks.

On Wednesday, market participants will keep their attention on Powell, who will speak before the House Financial Services Committee at 1500 GMT.

Zaye Capital's Naeem Aslam said: "The Fed chairman has made it clear to market players that the Fed isn't done with its job of raising interest rates. In addition, if investors think that the Fed is worried about the economic numbers, then they are wrong. This is because the message from the chairman was that the data is telling them a compelling story that the US economy is standing on a strong footing and there is a strong need for interest rates to rise at a faster level.

"Now speculators in the market believe that the next interest rate hike by the Fed will be 50 basis points. Basically, hopes of 25 basis points of interest rate hikes in March are shattered and they are unlikely to see the daylight anytime soon. The fact that the Fed has adopted a hawkish monetary policy stance once again has made traders worried and they are concerned that the Fed may be overconfident with its approach."

On the macro front, mortgage applications rose 7.4% in the week ended 3 March, according to the Mortgage Bankers Association of America, the first increase in four weeks and a rebound from the 28-year low hit a week earlier. Applications to refinance a loan surged 9.4% and those to purchase a home increased 6.6%.

Still to come, February employment change figures will be published at 1315 GMT, while trade balance figures and January JOLTs jobs data will follow at 1330 GMT and 1500 GMT, respectively.

No major corporate earnings were slated for release on Wednesday.

Reporting by Iain Gilbert at Sharecast.com