Wall Street futures slip as Fed minutes loom

[July 05, 2023]  (Reuters) - Wall Street futures fell on Wednesday, with all eyes on minutes from the Federal Reserve's June meeting for clues about the central bank's monetary policy path, while Sino-U.S. tensions and weak economic data from Beijing further dampened the mood.  

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 29, 2023. REUTERS/Brendan McDermid

The second half of the week also has some sets of economic data that are expected, including the non-farm payrolls report on Friday.

Investor focus will be on minutes from the Fed's most recent policy meeting, expected at 2 p.m. ET, as U.S. markets resumed trading after being closed for the July 4 Independence Day holiday.

Traders are near certain that the U.S. central bank will hike interest rates in July after pausing last month, but have only priced in a 32% chance that it would need to deliver another hike by October.

"There will clearly be a couple of hawkish sentences that will hit the headlines, given that Fed officials paused their rate hikes in their June meeting, but their dot plot showed two more interest rate hikes before a real and a longer pause," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

Rate-sensitive growth and technology companies such as Microsoft and Alphabet eased 0.6% and 0.4%, respectively, in premarket trading.

Netflix gained 1.2% on a ratings and price target upgrade from Goldman Sachs.

China will control exports of some metals widely used in the semiconductor industry, its commerce ministry said on Monday, the latest salvo in an escalating war over access to high-tech microchips between Beijing and the United States.

Semiconductor stocks such as Nvidia and Micron Technology fell 1.1% and 0.9%, respectively.

At 05:12 a.m. ET, Dow e-minis were down 107 points, or 0.31%, S&P 500 e-minis were down 14.75 points, or 0.33%, and Nasdaq 100 e-minis were down 74.25 points, or 0.48%.

Traders awaited U.S. factory orders data, expected at 10 a.m. ET, to further gauge the impact of higher rates on the economy after data on Monday showed U.S. manufacturing slumped in June.

Also denting risk sentiment and raising concerns about global economic recovery, China's services activity expanded at the slowest pace in five months in June, a private-sector survey showed.

Among other movers, United States Steel shed 2% after Exane BNP Paribas cut its rating.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta)

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