Futures inch lower on Fed policy caution, China data hits sentiment
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[June 07, 2023] (Reuters)
- U.S. stock index futures edged lower on Wednesday as investors
remained cautious ahead of inflation data and the Federal Reserve's
policy meeting next week, while worse-than-expected China exports data
for May hit sentiment.
Wall Street's main indexes ended higher on Tuesday, with S&P 500 up
almost 20% from its October 2022 lows, underpinned by rising
expectations that the Fed will hold interest rates steady at its policy
meeting on June 13-14.
U.S. shares have also been boosted by a rally in megacap stocks and a
stronger-than-expected earnings season. However, some analysts say that
profit-taking may be round the corner for big tech and other major
growth stocks.
"Nasdaq is more than 40% up from its October lows, not posting a decent
correction since mid-March. Therefore, the risks of a corrective setback
seem to be increasing, especially with a potential liquidity squeeze
from Treasury issuance looming," said Charalampos Pissouros, senior
investment analyst at XM.
Inflation data in the U.S. is expected to show consumer prices cooled
slightly on a month-over-month basis in May but core prices are likely
to have remained elevated, and the Fed is widely expected to hold
interest rates.
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Money market participants see a 75% chance that the U.S. central bank
will skip raising interest rate in the June meeting but will hike in
July, according to the CME's Fedwatch tool.
Two-year Treasury note yield that best reflects interest rate
expectations slipped by 2 basis points (bps), the same as the drop in
yield on 10-year bonds. [US/]
China's May exports slumped 7.5% year-on-year, much larger than the
forecast 0.4% fall and the biggest decline since January, raising
concerns over global demand.
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A trader works on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., May 22, 2023.
REUTERS/Brendan McDermid
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At 5:37 a.m. ET, Dow e-minis were down 43 points, or 0.13%, S&P 500
e-minis were down 3.5 points, or 0.08%, and Nasdaq 100 e-minis were
down 23.25 points, or 0.16%.
Among individual stocks, Netflix climbed 2.2% in premarket trading
after Wells Fargo raised the stock's target price to $500 from $400
per share, the highest on Wall Street, according to Refinitiv.
Coinbase shares rose 3.9% after hitting a seven-month low on Tuesday
as the Securities and Exchange Commission sued the largest U.S.
crypto exchange, accusing it of operating illegally, without having
first registered with regulator.
Cathie Wood's Ark Invest bought 419,324 shares of Coinbase on
Tuesday.
Shares of Yext Inc jumped 18.4% premarket after the New York-based
online marketing firm raised its annual earnings forecast.
(Reporting by Shubham Batra in Bengaluru; Editing by Vinay Dwivedi)
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