US pre-open: Futures lower following comments from Fed officials

Wall Street futures were in the red ahead of the bell on Tuesday following comments from some top Federal Reserve officials overnight.

As of 1215 GMT, Dow Jones futures were down 0.40%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.33% and 0.38% softer, respectively.

The Dow closed 112.96 points lower on Monday as major indices struggled to extend gains recorded in their first strong session of 2023.

Fears regarding higher interest rates were in focus early on Tuesday after Atlanta Federal Reserve president Raphael Bostic said overnight that interest rates should rise above 5% and stay there for a "long time" and San Francisco Fed head Mary Daly stated the central bank should continue to raise rates, albeit at a slower pace.

The comments come ahead of a speech from Fed chairman Jerome Powell scheduled for 1400 GMT, which will almost certainly move markets.

Discussing the forthcoming speech, AvaTrade's Naeem Aslam said: "There are two things that traders would very much like to know. Firstly, what is the Fed's take on the economic health of the US economy, and secondly, where is the monetary policy heading given that the Fed is still far off in reaching its inflation target?

"Some members of the Fed Committee do think that inflation is more than likely to kiss the three-handle by the end of this year, which would be a remarkable achievement for the Fed if it becomes a reality. But does that mean that the Fed will continue to increase the rates in the same aggressive manner they currently are increasing? If the answer is yes, then it certainly means that the Fed is more than likely to make another policy mistake because aggressive interest rate hikes mean a hard landing for the US economy and one can only dream about a soft landing."

Elsewhere on the macro front, the National Federation of Independent Business' small business optimism index declined to a six-month low of 89.8 in December, down from 91.9 in November, as owners expecting better business conditions over the next six months worsened by eight points to -51% and inflation remained the single most important business problem, with 32% of owners reporting it as their top issue in operating their business.

Still to come, November wholesale inventories data will be published at 1500 GMT.

In the corporate space, Bed Bath & Beyond will report earnings prior to the open.

Reporting by Iain Gilbert at Sharecast.com