US STOCKS-Futures decline as Fed Chair weighs inflation

On Wednesday, Reuters U.S. stock index futures declined as investors assessed comments from Federal Reserve Chair Jerome Powell about how long it may take control of inflation, while Microsoft's shares kept losses in check.

Powell said on Tuesday that 2023 will be a year of significant declines in inflation. He also said that the battle against inflation will take a lot of time and that interest rates may need to move higher than expected.

After yesterday's exuberance over indications that disinflationary forces are taking hold, markets analyst Susannah Streeter, Markets Analyst at Hargreaves Lansdown, said that the underlying worries about how high rates will have to go are bubbling to the surface.

The see-saw sentiment is set to continue as investors wait for data to filter through, which they hope will give a fresh light on the direction of Fed policy. Powell's comments, which came after the strong jobs report on Friday, pushed Wall Street's main indexes higher on Tuesday with the S&P 500 up 1.29% and the Nasdaq adding 1.90%.

After taking a hit last year, the US stock market has had a strong start in 2023, leading by the battered megacap growth stocks on optimism that the Fed will temper its aggressive rate hikes.

Microsoft Corp. rose 1.9% in premarket trading after the tech giant said it was revamping its Bing search engine and Edge Web browser with artificial intelligence.

The central bank's path of interest rate hikes will be closely watched by traders as a result of a slew of Fed officials later in the day.

Money market participants believe that the Fed's terminal rate will be at 5.14% by July, with a 98.5% chance of a 25 basis point rate hike in March.

Walt Disney Co, CVS Health Corp, Uber Technologies Inc and Yum Brands Inc will report their quarterly earnings later in the day.

So far, more than half of the S&P 500 companies have reported quarterly earnings, with 69.1% of them beating expectations, according to Refinitiv. Analysts expect fourth-quarter earnings to decline by 3.1%.

The Dow e-minis were down 55 points, or 0.16%, S&P 500 e-minis were down 10.25 points, or 0.25%, and Nasdaq 100 e-minis were down 26 points, or 0.20%.