Futures take a breather after rally; FedEx slides
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[December 20, 2023] (Reuters)
- U.S. stock index futures inched lower on Wednesday as investors took a
breather from a rally that was sparked by the Federal Reserve's likely
pivot to a dovish policy, while FedEx tumbled after issuing a grim
outlook.
All the three main indexes have advanced over 2% since the Fed's Dec. 13
verdict where policymakers projected lower policy rates by the end of
2024, with the blue-chips Dow hitting record highs every other day and
the S&P 500 within arm's reach of its highest closing levels since
January 2022.
Since then central bank officials have attempted to keep investor
euphoria in check, the latest being Chicago Fed President Austan
Goolsbee who said further progress on beating back inflation will be the
decisive factor in any central bank decision next year to reduce
interest rates.
Still, traders expect the Fed to ease credit conditions by over 125
basis points by September next year, with a 71.1% chance that the first
25 basis point cut could come in as early as March.
"We've seen positive sentiments starting back in October, but really
gathering steam in December and obviously last week when we saw the FOMC
coming in much more dovish than expected ... and traders are now
starting to assess the sustainability of a further rally," said Daniela
Hathorn, senior market analyst at Capital.com.
On the economic data front, investors await consumer confidence data
that is expected to improve to 104 in December, as per a Reuters poll,
and November existing home sales, both due at 10:00 a.m. ET.
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A Christmas tree is seen outside of the New York Stock Exchange
(NYSE) in New York City, U.S., December 15, 2023. REUTERS/Brendan
McDermid/File Photo
Meanwhile, FedEx slid 9.9% in trading before the bell after the
global delivery firm cut its full-year revenue forecast and reported
quarterly profit that fell far short of analysts' targets, as its
largest Express business saw demand from the U.S. Postal Service
drop.
The results also dragged down shares of rival United Parcel Service
by 2.8% in thin trading.
"Whilst many economic indicators are backward looking logistics
takes a real time temperature, so this set of results is likely to
trouble many investors," said Danni Hewson, head of financial
analysis at AJ Bell.
At 5:55 a.m. ET, Dow e-minis were down 44 points, or 0.12%, S&P 500
e-minis were down 8.25 points, or 0.17%, and Nasdaq 100 e-minis were
down 47.75 points, or 0.28%.
Among tech-heavy Nasdaq constituents, Microsoft, Apple and
Amazon.com slipped between 0.4% and 0.5%, while Nvidia slid 0.9%.
Alphabet dipped 0.4% after a report said Google plans to reorganize
a big part of its 30,000-person ad sales unit, citing a person with
knowledge of the situation.
(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)
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