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(Reuters) -U.S. stock index futures fell on Thursday, a day after Federal Reserve Chair Jerome Powell stuck to his hawkish stance on interest rate hikes and ahead of his second day of testimony before a Senate committee.
In his remarks to lawmakers in Washington on Wednesday, Powell said the outlook for further rate increases are “a pretty good guess” of where the central bank is heading if the economy continues in its current direction.
Financial markets, however, are still pricing in a 25-basis-point rate increase in July and no further hikes after that, according to CME FedWatch tool.
In the previous session, shares of megacap companies came under pressure and led the declines in U.S. stocks for the third straight day after Powell reinforced the Fed’s inflation objective.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said investors are worried that a rally that has been largely driven by a narrow group of stocks was “ripe”.
“In addition to that, Powell’s testimony in front of Congress yesterday did nothing to dispel concerns that perhaps the pause we had in the June meeting was simply that,” he said.
Ahead of his second day of testimony before the U.S. Senate Banking Committee at 10 a.m. ET (1400 GMT), yields on the 2-year and 10-year Treasury notes ticked higher. [US/]
Investors will also keep an eye on initial jobless claims for week ended June 17 and housing sales data due later in the day, while also awaiting comments from three Fed policymakers due to speak after the markets open.
Shares of Tesla (NASDAQ:TSLA) slid 3% before the bell after Morgan Stanley (NYSE:MS) downgraded the electric automaker to “equal weight” from “overweight”.
At 7:28 a.m. ET, Dow e-minis were down 114 points, or 0.33%, S&P 500 e-minis were down 13.75 points, or 0.31%, and Nasdaq 100 e-minis were down 61 points, or 0.41%.
Barring Microsoft (NASDAQ:MSFT), all other major technology and growth companies declined between 0.2% and 0.6%.
Spirit AeroSystems (NYSE:SPR) tanked 8.5% and planemaker Boeing (NYSE:BA) slipped 3.3% as the parts supplier said it will suspend production at its plant in Wichita, Kansas, after workers rejected a proposed four-year deal and announced a strike from June 24.
U.S.-listed shares of Accenture (NYSE:ACN) fell 4.9% after the IT consulting firm forecast fourth-quarter revenue below Street estimates.
Darden Restaurants (NYSE:DRI) slid 4.3% after the Olive Garden parent forecast its annual outlook below estimates.
