By Geoffrey Smith
Investing.com -- U.S. stock futures trimmed their overnight gains on Wednesday after prepared remarks to Congress by Federal Reserve Chair Jerome Powell indicated that the central bank is still likely to raise interest rates within weeks.
"With inflation well above 2 percent and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month," Powell's prepared remarks to the House Financial Services Committee said.
Dow Jones futures ticked down by some 80 points to 33,400 within 10 minutes of the news, while S&P 500 futures fell some 10 points. Both remained above their Tuesday closing levels, but the move means that both contracts have managed only a minimal bounce after suffering heavy losses again on Tuesday.
Surging oil prices and increasing fears about the availability of Russian energy and agricultural commodities have reinforced concerns about inflation overnight.
"Demand is strong, and bottlenecks and supply constraints are limiting how quickly production can respond," Powell said in his prepared remarks. "These supply disruptions have been larger and longer lasting than anticipated, exacerbated by waves of the virus, and price increases are now spreading to a broader range of goods and services."
He added that the immediate effects on the U.S. economy from the invasion of Ukraine and the ensuing Western reaction "remain highly uncertain."
"Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook," Powell said.