Equity futures have not changed much as traders contemplate the prospects for higher interest rates

Stock futures were little changed on Tuesday as concerns about higher rates remained among traders.

Futures related to the Dow Jones Industrial Average fell 60 points, or 0.2%, while the S&P 500 fell less than 0.1%. Nasdaq 100 futures hovered just above the flat line.

Atlanta Federal Reserve Chairman Rafael Bostick said Monday that interest rates should rise above 5% and stay there “for a long time.” Meanwhile, San Francisco Fed President Mary Daley said the central bank should continue to raise interest rates, albeit at a slower pace. Treasury yields rose slightly on Tuesday.

These comments came ahead of Fed Chair Jerome Powell’s scheduled speech at 9 a.m. ET.

Investors came into the new year worried that higher federal interest rates could tip the economy into recession. However, many seem to be betting that inflation is starting to ease.

On Wednesday, the Nasdaq Composite posted a 0.6% gain, supported by a 6% rally in Tesla. Meanwhile, the Dow erased a gain of 304 points and closed down nearly 113 points, while the S&P fell 0.1%.

Monday also marked the end of the first five trading days of 2023, as the S&P 500 rose 1.1%. According to the classic stock market indicator, this kind of early strength That could bode well for the rest of the year.

Fundstrat’s Tom Lee called it a “strong omen” and said the market is poised for a 20% rally this year.

Lee told CNBC that the Fed wants financial conditions to remain “tight.” “Closing Bell: Overtime”. “The dollar, stocks, bonds – everything is kind of going, so they’re probably a little bit worried and want to make sure that inflation is actually dead. But one of the changes especially since October is that inflation has been under fire.”

Lee added, depending on how Thursday’s CPI data rates, the bond market may prompt the Fed to make February its last rate hike before the cuts.