On Thursday, US stock index futures moved up, as investors were assessing the monetary policy outlook. This was because of increasing concerns that aggressive interest rate hikes for tackling inflation could bring about an economic recession.

Inflation and interest rates

The first half of the year saw global stock markets come under intense selling pressure because of a rise in inflation, the hawkish stance of the US Federal Reserve, and the Russia and Ukraine conflict. On Wednesday, the stock indexes in the United States had seesawed for most of the trading session.

This was after the minutes of the policy meeting of the Fed last month showed that the central bank is committed to getting prices under control. The meeting last month had seen the bank increase interest rates by 75 basis points, which is the biggest hike recorded since 1994. A similar move is expected from the bank this month as well.

But, the Fed policymakers acknowledged that there was a risk of a ‘larger-than-expected’ impact of the higher interest rates on economic growth. But, they were still adamant that an increase of about 50 or 75 basis points this month was appropriate.

Index performance

The first half of the year was a turbulent one for US stock indexes. The Nasdaq and the S&P 500 have declined by 27.4% and 19.3% this year already, as technology and other high-growth stocks took a beating.

With global central banks moving to hike interest rates and tightening monetary policies, it has triggered fears of an economic downturn. In recent days, even commodity and oil prices have been hammered. There was a 0.32% rise in Dow e-minis, as they climbed by 98 points.

Meanwhile, there was a 0.23% increase in S&P 500 e-minis or 8.75 points, and a gain of 0.35%, or 36.5 points was also seen in the Nasdaq 100 e-minis. There was also an 8.7% rise in the stocks of GameStop Corp in premarket trading. This was after a stock split of four-for-one was approved by the board of the videogame retailer.

Market data

The focus of investors is now on economic and market data, which will provide clues on what to expect from the US Federal Reserve in terms of policy and how long the tightening would continue. Earnings report season is just around the corner that will show how companies have held up in the current market conditions.

Economic data including the nonfarm payrolls report of June is also due on Friday and investors would be watching it to assess the health of the economy. The Labor Department is also scheduled to publish a report on Thursday about claims for unemployment benefits from the state. This number is expected to fall for the week.

The US central bank is also expected to take these statistics into account when deciding its next step in terms of policy tightening. However, markets have already priced in a rate hike of 75 basis points in July and do not expect it to change.