Dow futures turned positive Tuesday morning, up slightly from overnight trading as investors set their sights on a prolific week in Washington that includes the Federal Reserve’s final policy-setting meeting of 2021, set to commence today, and the release of new prints on retail sales, housing starts and other economic data.

Contracts on the Dow posted an uptick, up 22 points to 35,667, while S&P 500 and Nasdaq futures continued to edge lower.

Research from Goldman Sachs showed the S&P 500 is powered by five stocks that have accounted for 51% of its return since the end of April. Microsoft, Google, Apple, Nvidia and Tesla account for more than one-third of the S&P 500’s 26% return this year, according to Goldman. 

Traders are awaiting a decision from the Fed on how quickly the central bank will tighten monetary policy amid a backdrop of fresh inflation numbers that reflected the fastest annual increase in nearly four decades. The Labor Department’s Consumer Price Index (CPI) soared 6.8% in November compared to last year, according to figures published last week.

The Federal Open Market Committee (FOMC) is scheduled to hold its two-day policy-setting meeting starting on Tuesday, followed by the release of the monetary policy statement and remarks from Federal Reserve Chair Jerome Powell Wednesday. An updated Summary of Economic Projections outlining individual members’ outlooks for economic conditions and interest rates is set to accompany the statement.

The Fed has been under pressure to control rising inflation levels, as investors watch for clues of a faster taper that could set the stage for earlier rate hikes.

“Because inflation expectations do appear to be adaptive, our view is that the longer inflation stays elevated, the greater the risk that consumers adjust their behaviors in a way that contributes to persistently elevated inflation” wrote PIMCO economist Tiffany Wilding in a recent note to clients.

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“We believe the Fed will want to manage this risk by shortening the time over which it winds down its purchases of U.S. Treasuries and agency mortgage-backed securities (MBS), aiming to end the program in March 2022, while also signaling a June rate hike is likely,” said Wilding.

PIMCO managing director and portfolio manager Sonali Pier also separately told Yahoo Finance Live that the firm expects to see two hikes in 2022, three hikes in 2023, and potentially four in 2024, with the Fed trying to bring the policy rate to neutral.

“Amid proliferating signs of solid growth and a robust job market, various measures depict a deeply troubled economy,” wrote Oxford Economics senior …….

Source: https://finance.yahoo.com/news/stock-market-news-live-updates-december-14-2021-232905142.html