Trading in U.S. stock futures indicates a modestly negative start on Wednesday, as investors react to tech earnings and await the Federal Reserve rate decision.
Historically, the market has traded higher immediately after the announcement of a monetary policy decision but later dipped during Fed Chair Jerome Powell’s press conference. Any hint of a hawkish stance from Powell could further impact market sentiment on a day when earnings may not provide strong support.
Recap of Tuesday’s Trading
Stocks closed mostly higher on Tuesday, bolstered by positive consumer confidence data. The Conference Board’s consumer confidence index rose to its highest level since July 2021, climbing from 110.7 in June to 117 in July.
Encouraging consumer sentiment serves as a leading indicator for consumer spending, a major driver of economic activity.
The major averages had a mixed opening, experiencing early volatility before rallying following the consumer confidence report. The S&P 500 and the tech-heavy Nasdaq Composite ended the day solidly higher, while the Dow and the Russell 2000 Index gave back some gains but managed to finish marginally up.
The Dow Industrials extended its winning streak to 12 sessions, the longest since February 2017, while the S&P 500 Index reached its highest level in approximately 16 months.
Technology and material stocks led the market’s gains on Tuesday.
Index
Performance (+/-)
Value
Nasdaq Composite
+0.61%
14,144.56
S&P 500 Index
+0.28%
4,567.46
Dow Industrials
+0.08%
35,438.07
Russell 2000
+0.02%
1,966.11
A 25 basis point hike on Wednesday is a given but the future rate trajectory will be data-dependent, said John Lynch, Comerica’s chief investment manager.
“Fed Chair Jerome Powell’s recent comments following the June FOMC meeting have taken a hawkish stance, suggesting that at least two more interest rate increases may be necessary this year to bring inflation down to their 2% target,” the analyst said. The softer-than-expected inflation data since the last meeting has given rise to hopes that the Fed may be nearing the end of its tightening cycle, he said.
“Given the uncertainty around the effects of monetary policy lags, we expect to see the Fed adopt a wait-and-see approach on additional rate increases,” he added.
Futures Today
Futures Performance On Wednesday
Futures
Performance (+/-)
Nasdaq 100
-0.25%
S&P 500
-0.14%
Dow
-0.23%
R2K
-0.01%
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) slipped 0.13% to $454.85 and the Invesco QQQ ETF (NASDAQ:QQQ) fell 0.20% to $378.01, according to Zenger News Pro data.
Upcoming Economic Data:
The Mortgage Bankers Association is scheduled to release its weekly mortgage application data at 7 a.m. EDT. In the week ended July 14, mortgage applications volume rose a seasonally adjusted 1.1% week-over-week as the 30-year fixed rate fell to 6.87 percent.
The Commerce Department is due to release its new home sales report at 10 a.m. EDT. Economists, on average, expect new home sales to slip from 763,000 units in April to 725,000 in June.
The Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. EDT.
The Fed is due to announce its monetary policy decision at 2 p.m. EDT through a post-meeting policy statement. Powell will host a presser at 2:30 p.m. EDT to explain the decision and offer insights into the future rate trajectory.
See also: Best Futures Brokers
Stocks In Focus:
- Snap, Inc. (NYSE:SNAP) shares plummeted about 20% in premarket trading after the company issued lackluster guidance.
- Microsoft Corp. (NASDAQ:MSFT) fell about 3.70%, while Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) rose 6.64% in reaction to their respective quarterly results.
- PacWest Bancorp (NASDAQ:PACW) jumped over 31% after it announced a deal to combine with Banc of California, Inc. (NYSE:BANC).
- AT & T Corp. (NYSE:T), Boeing Co. (NYSE:BA), Coca-Cola Co. (NYSE:KO), General Dynamics Cop. (NYSE:GD) and Union Pacific Corp. (NYSE:UNP) are among the notable companies scheduled to release their quarterly results ahead of the market opening.
- Those companies reporting after the market close include Edward Life Sciences Corp. (NYSE:EW), Chipotle Mexican Grill, Inc. (NYSE:CMG), Lam Research Corp. (NASDAQ:LRCX), Meta Platforms, Inc. (NASDAQ:META), O’Reilly Automotive, Inc. (NASDAQ:ORLY), Teradyne, Inc. (NASDAQ:TER) and Western Union Co. (NYSE:WU).
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures fell 1.07% to $78.78 in early European session on Wednesday after Tuesday’s 1.13% rally.
The benchmark 10-year Treasury note rose 0.029 percentage points to 3.883%.
The Asian markets closed Wednesday’s session mixed, with Hong Kong, China, Taiwan and South Korea moving sharply lower, while most other markets prevailed despite the Fed jitters. The Japanese market ended with little change.
European stocks lost ground in late trading on Wednesday, as traders looked ahead to an interest rate decision from across the Atlantic.
Produced in association with Benzinga
