U.S. stock index futures pointed to a softer start for Wall Street, as investors waited for more clues on interest rate policy when minutes of the early May Federal Open Market Committee meeting are released later in the session.
How are stock-futures trading?
- S&P 500 futures ES00, -0.41% were down 0.3% to 3,927
- Dow Jones Industrial Average futures YM00, -0.39% fell 0.3% to 31,775
- Nasdaq-100 futures NQ00, -0.54% slipped 0.3% to 11,735
On Tuesday, the Dow Industrials DJIA, +0.15% rose 0.2% to 31,928.62, its third-straight gain. The S&P 500 SPX, -0.81% fell 0.8% to 3,941.48, snapping two straight days of gains, while the Nasdaq Composite COMP, -2.35% slumped 2.4% to 11,264.45, its lowest close since Nov. 3, 2020.
What’s driving the markets?
Investors are concerned that economic growth will slow quickly amid tighter monetary conditions, with the war in Ukraine and China’s Covid lockdowns worsening the outlook.
The pullback Tuesday came after a grim warning from Snapchat parent Snap Inc. SNAP, -43.08% that weighed on technology stocks, while weak home sales also drove downbeat sentiment among investors.
Markets may pivot on clues to future monetary policy decisions, when the Fed minutes from the latest monetary policy meeting are released at 2 p.m. Eastern Time.
Read: S&P 500 hovers near bear market. Its ferocity may depend on the economy.
“While the hunt for any mention of a possible 75bps rate hike may be futile, the base case stays at a series of 50bps rate hikes to follow,” said a team of strategists at Saxo Bank. “But investors are also increasingly parsing Fed talk to look for signs of stagflation or economic slowdown and that really is driving the market sentiment for now.”
Fed Chairman Jerome Powell has laid plans for the central bank to boost the benchmark interest rate by half-a-percentage point at the next two FOMC meetings in June and July, bringing it to near 2% by August.
In economic data, orders at U.S. factories for long-lasting goods such as machinery and electronics rose a 0.4% in April, signaling the economy was still growing at a steady pace in the early spring. Economists polled by the Wall Street Journal had forecast a 0.7% increase.
Earnings in focus for Wednesday will be chip maker Nvidia Corp. NVDA, -4.40% and cloud computing–based data warehousing group Snowflake Inc. SNOW, -6.64%. “The worry around Nvidia is to what extent the decline in cryptocurrencies is beginning to weigh on sales due to a slowdown in crypto mining,” said the Saxo strategists.
“Snowflake was one of the hottest IPOs in recent memory attracting even Berkshire Hathaway as one of its investors and top line growth has been strong, but the market is getting increasingly nervous that growth is decelerating faster than initially expected,” they added.
Read: Here’s what KPMG’s U.S. chief is saying about the market downturn, the economy and M&A
Shares of Wendy’s Co. WEN, -2.34% rose 10% in premarket after Nelson Peltz’s hedge fund Trian disclosed plans for possible sale of the burger chain.
Which companies are in focus?
- Shares of Dick’s Sporting Goods Inc. DKS, -5.35% plunged 15% in premarket trading Wednesday, after the sporting goods and apparel retailer reported fiscal first-quarter results that beat expectations but cut its full-year outlook.
- Express Inc. shares EXPR, -19.32% soared 12% in premarket trade Wednesday, after the clothing retailer posted a narrower-than-expected loss for the first quarter and offered guidance that was above consensus.
- Wendy’s WEN, -2.34% rallied in premarket action after long-time shareholder Trian Fund Management said it was exploring an acquisition or other potential deal for the restaurant chain. Trian is the company’s largest shareholder, with a 19.4% stake.
- Nordstrom JWN, -3.59% rose in the premarket after the retailer raised its annual sales and profit forecast late Tuesday.
How are other assets trading?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 2.736% dropped 2 basis points to 2.739%, as investors sought safety in government debt. Yields and Treasury prices move opposite each other.
- The ICE Dollar Index DXY, +0.49%, which measures the greenback against major currencies, was up 0.5%.
- In oil futures CL.1, +0.81%, West Texas Intermediate crude for July delivery CLN22, +0.81% gained 1.2% to $111.12 a barrel. Gold for June delivery GCM22, -1.01% dropped 0.6% to settle at $1,854.30 an ounce.
- Bitcoin BTCUSD, +0.35% was up 0.8% at $29,406.
- In European equities, the Stoxx Europe 600 SXXP, +0.34% went up 0.2%, while London’s FTSE 100 UKX, +0.40% edged 0.3% higher.
- In Asia, the Shanghai Composite SHCOMP, +1.19% finished 1.2% higher, while Hong Kong’s Hang Seng Index HSI, +0.29% gained 0.3% and Japan’s Nikkei 225 index NIK, -0.26% dropped 0.3%.
