US Stock Futures Fall from 3-Month Highs as Traders Await Fed Minutes

US stock index futures pulled back from recent highs early Wednesday as bulls held firm ahead of the release of the minutes of the latest Federal Reserve monetary policy meeting later in the session as analyzed retail sales data for July.

How are stock index futures traded?
  • S&P 500 ES00 ES00 Futures,
    -0.67%
    down 38.8 points, or 0.9% to 4,272

  • Dow Jones YM00 Industrial Average Futures,
    -0.49%
    fell 216 points, or 1% to 33,889

  • Nasdaq 100 Futures NQ00,
    -0.95%
    eased 139 points, or 1% to 13,519

On Tuesday, the Dow Jones Industrial Average DJIA,
-0.52%
rose 240 points, or 0.71%, to 34,152, the S&P 500 SPX,
-0.68%
rose 8 points, or 0.19%, to 4,305, and the Nasdaq Composite COMP,
-1.00%
it fell 26 points, or 0.19%, to 13103. The Nasdaq Composite is up 23.1% from its mid-June low, but is still down 16.3% year-to-date.

What drives the markets?

Appetite for additional risky bets was fading as investors took time to assess the sharp summer rally that propelled the stock market to three-month highs, and awaited the latest monetary policy update via the minutes. the last meeting of the Fed.

Hopes that inflation has peaked and that the Fed can avoid an economic hard landing have lifted the S&P 500 17.4% from its mid-June low, leaving the benchmark challenging its average. mobile 200 days for the first time. weather from april.

“The index traded above its 200 DMA twice this year, once in early February and then in late March, but was unable to sustain gains and sold off quickly,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. .

“We will see if the third time is the charm; earnings and the FOMC minutes will be decisive for the short-term direction,” he added.

Source: BNP Paribas

The Federal Reserve is due to release the text of its late July rate-setting meeting at 2pm ET and traders will be eager to see if the discussion matches current market expectations for the pace of rate hikes. .

Previous investors received more clues about the health of the American consumer. Following better-than-expected results on Tuesday from Walmart WMT,
+1.89%
and Home Depot HD,
+0.35%,
it was the turn of the Target TGT retail pairs,
-2.14%
and Lowe’s BASS,
+2.66%
to deliver profit. Target numbers disappointedafter higher markdowns led to lower margins, but Lowe’s figures were well received.

In economic data, US retail sales. remained unchanged overall in July, though largely due to falling gasoline prices and lower purchases of new cars and trucks. Economists surveyed by Dow Jones Newswires and The Wall Street Journal forecast 0.1% growth.

Retail sales less cars increased 0.4% in July, while retail sales excluding cars and gasoline increased 0.7% in July.

Potentially contributing to the market’s caution on Wednesday are concerns that the rally may look overextended in the short term.

The S&P 500 14-day relative strength index future, a closely watched indicator of momentum, was 78 in morning action, according to CMC Markets. Technical analysts consider a figure above 70 to be in “overbought” territory.

“With [the] the market looks overbought and having risen more than 15% from the June lows, the recent move, in our opinion, is starting to look overdone. The growth outlook will remain difficult to navigate,” said Greg Boutle, head of US equity and derivatives strategy at BNP Paribas.

S&P 500 (SPX) valuations are also unconvincing, Boutle noted. “SPX 2023 price/earnings multiple at 18x ​​is right at the top end of the 30-year range for future 1-year earnings (eg, bubble periods, late 90s, and post-close recovery). In the midst of a down cycle, this could make it difficult to sustain the recent pace of recovery.”

Source: BNP Paribas

Companies in focus
  • Actions of target corporation
    TGT,
    -2.14%
    fell 2.1% in premarket trading on Wednesday, after discount retailer reported Fiscal second-quarter profit fell well short of expectations as higher discount rates led to lower gross margins, but revenue beat forecasts.

  • Actions of walmart inc.
    WMT,
    +1.89%
    fell 0.3% in premarket trading on Wednesday after rising to a three-month high on Tuesday, after discount retail giant Fiscal Second Quarter Reported Earnings and Revenue that beat recently lowered expectations and raised its full-year earnings outlook.

  • Actions of TJX Companies
    TJX,
    +0.66%
    fell 1.4% in premarket trading on Wednesday, after the clothing and home fashions retailer priced out Fiscal Second Quarter Reported Earnings which beat expectations, while same-store sales fell more than forecast as “historically high inflation” weighed on consumer spending, particularly on household items.

How are other assets doing?
  • Oil futures were a bit softer, with US WTI CL.1 crude,
    +0.53%
    shedding 0.1% to $86.45 a barrel, on hopes that a nuclear deal with Iran could help the country boost exports.

  • The 10-year Treasury yield TMUBMUSD10Y,
    2.887%
    it rose 8.1 basis points to 2.893% as traders awaited the Fed’s minutes.

  • The ICE DXY dollar index,
    +0.22%
    advanced 0.2% to 106.68, and this put pressure on GC00 gold,
    -0.44%,
    0.4% discount to $1783.4 an ounce.

  • bitcoinbtc usd,
    -2.37%
    fell 1% to $23,723.

  • Asian markets were firmer overall after Wall Street moved to a fresh three-month high overnight. Japan Nikkei 225 NIK,
    +1.23%
    added 1.2% and Hong Kong’s Hang Seng HSI,
    +0.46%
    rose 0.5%. In Europe, the mood was more mixed, reflecting the drop in US futures on Wednesday and the Stoxx 600 SXXP,
    -0.74%
    fell 0.4%.

Leave a Reply

Your email address will not be published.