US futures markets saw a decline after the S&P 500 reached a record high for the second consecutive day. Futures tied to the S&P 500, Nasdaq, and Dow Jones all slipped 0.1%, as investors focused on the Federal Reserve’s latest stance on interest rates.
Federal Reserve’s Cautious Outlook
The Federal Reserve released the minutes from its January meeting on Wednesday, revealing that officials are supportive of holding off on interest rate cuts. The central bank cited concerns over inflation, which could be exacerbated by factors such as President Donald Trump’s tariffs and mass deportations of migrants. These actions could contribute to rising costs in the economy, keeping inflationary pressures intact.
Impact of Tariffs and Defense Spending
The continued uncertainty around Trump’s tariffs is causing global trade to shift into uncharted waters. As tariffs on automobiles become more imminent, General Motors (GM) announced that it may reconsider its plant locations, a move that signals potential challenges in the automotive industry.
Meanwhile, the announcement of an 8% cut in military spending over the next five years by Defense Secretary Pete Hegseth sent shockwaves through the markets. The news triggered an immediate drop in shares of military AI company Palantir (PLTR), which saw a 10% drop, followed by an additional 3% dip in after-hours trading.
Earnings Season and Retail Expectations
Earnings season continues to unfold, with retail giant Walmart (WMT) expected to release its earnings report on Thursday. Analysts predict the company will surpass Wall Street’s high expectations, offering a potential boost to the broader market.
Investors will be closely watching Walmart’s results for insights into consumer behavior and the retail sector’s resilience amid ongoing economic uncertainty.
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