Stock futures trade higher ahead of Powell's testimony

U.S stock futures were higher early on Thursday ahead of weekly employment data and Federal Reserve Chair Jerome Powell's second day of testimony on Capitol Hill.

Dow Jones Industrial futures traded up 40 points, or just 0.1%, while the S&P 500 futures rose 0.4%. Contracts on the tech-heavy Nasdaq gained 0.7%. All three major indexes closed in the red in the previous trading session, but were little changed.

After advances of more than 2% to start the holiday-shortened four-day trading period, stocks tried to sustain this week's gains. The S&P 500 fell 5.8% last week, the most since March 2020, marking the benchmark's second back-to- back weekly loss of more than 5%.

On Thursday, Fed Chair Powell will be in the spotlight again when he speaks about monetary policy and inflation on day two of his meeting with lawmakers.

The U.S. central bank leader told the Senate Banking Committee in prepared comments that the Fed is to bring down inflation, a move that Powell conceded in his testimony that a recession was a possibility and acknowledged that a soft landing would be a very challenging feat in the Fed's fight to restore price stability.

The Fed is behind, and they've been behind for a while, according to Ryan Belanger, senior vice president of Claro Advisors, told Yahoo Finance Live on Wednesday. The soft landing speak is a myth that they've got their work cut out for them. Earlier this week, BlackRock strategists warned that a recession appears to be inevitable in the path forward, arguing that the current interest rate hiking campaign will stall economic growth without solving the inflation issue.

The Fed isn't looking for a recession, even though in our view it wouldn't be needed if it wanted to drive inflation back to 2%, the firm stated.

Wall Street heavyweights have ramped up the recession, with warnings from economists at Citi, Goldman Sachs, and Deutsche Bank this week.