Futures Pointing To Roughly Flat Open Ahead Of Powell Remarks

Futures Pointing To Roughly Flat Open Ahead Of Powell Remarks

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, although early trading may be impacted by reaction to remarks by Federal Reserve Chair Jerome Powell.

Powell is scheduled to deliver opening remarks at the Division of Research and Statistics Centennial Conference just before the start of trading.

Traders are likely to pay close attention to Powell’s remarks for additional clues about the outlook for interest rates.

Optimism the Fed is done raising interest rates has contributed to recent strength on Wall Street, with the Nasdaq and S&P 500 seeing their longest winning streaks since November 2021.

Later in the day, trading may be impacted by reaction to the results of the Treasury Department’s auction of $40 billion worth of ten-year notes.

The auction results could have an impact on treasury yields, which have recently been a key driver of trading on Wall Street.

Ahead of Powell’s remarks and the release of the auction results, the yield on the benchmark ten-year note is nearly unchanged.

Stocks moved mostly higher over the course of the trading day on Tuesday, extending the upward trend seen over the past several sessions. With the continued advance, the Dow and the S&P 500 reached their best closing levels in well over a month.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Nasdaq jumped 121.08 points or 0.9 percent to 13,639.86, the S&P 500 climbed 12.40 points or 0.3 percent to 4,378.38 and the Dow rose 56.74 points or 0.2 percent to 34,152.60.

Profit taking contributed to initial weakness on Wall Street, as some traders looked to cash in on the recent strength in the markets.

Selling pressure waned shortly after the start of trading, however, with continued optimism about the outlook for interest rates contributing to the subsequent rebound.

The rebound by stocks also came as treasury yields showed a notable move back to the downside after surging in the previous session.

In U.S. economic news, a report released by the Commerce Department showed the U.S. trade deficit widened by more than expected in the month of September.

The Commerce Department said the trade deficit increased to $61.5 billion in September from a revised $58.7 billion in August.

Economists had expected the trade deficit to climb to $60.2 billion from the $58.3 billion originally reported for the previous month.

The wider than expected deficit came as the value of imports surged by 2.7 percent to $322.7 billion, while the value of exports jumped by 2.2 percent to $261.1 billion.

Software stocks turned in a strong performance on the day, driving the Dow Jones U.S. Software Index up by 1.6 percent to its best closing level in well over three months.

Considerable strength was also visible among biotechnology stocks, with the NYSE Arca Biotechnology Index climbing by 1.2 percent.

Airline, retail and tobacco stocks also showed notable moves to the upside, while energy stocks moved sharply lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 3.9 percent and the NYSE Arca Oil Index dove 2.4 percent.

Gold stocks also saw significant weakness amid a decrease by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.7 percent.

Commodity, Currency Markets

Crude oil futures are slumping $0.85 to $76.52 a barrel after plunging $3.45 to $77.37 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,970.70, down $2.80 compared to the previous session’s close of $1,973.50. On Tuesday, gold slid $15.10.

On the currency front, the U.S. dollar is trading at 150.94 yen compared to the 150.37 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0663 compared to yesterday’s $1.0700.

Asia

Asian stocks ended mostly lower on Wednesday as investors digested hawkish comments from Fed officials on the future rate hike path and looked ahead to Fed Chair Jerome Powell’s speech for direction.

A firmer dollar and a recovery in U.S. Treasury yields weighed on gold, while crude prices held steady in Asian trading after falling more than 4 percent on Tuesday to their lowest level since late July on the back of mixed Chinese trade data and easing Middle East tensions.

China’s Shanghai Composite Index slipped 0.2 percent to 3,052.37 in cautious trading ahead of a meeting between U.S. President Joe Biden and Chinese President Xi Jinping next week.

U.S. Treasury Secretary Janet Yellen will host Chinese Vice Premier He Lifeng for two days of talks this week before finance ministers of the APEC member nations officially kick off a summit Saturday.

Hong Kong’s Hang Seng Index dropped 0.6 percent to 17,568.46 ahead of the release of Chinese inflation data on Thursday.

An upgrade to China’s growth outlook by the International Monetary Fund and expectations that China will provide more support to the ailing property sector helped limit overall losses to some extent.

Japanese shares edged down slightly despite Moody’s Investors Service affirming the country’s A1 rating and maintaining a stable outlook.

The Nikkei 225 Index slipped 0.3 percent to 32,166.48, while the broader Topix Index settled 1.2 percent lower at 2,305.95.

Sumitomo Mitsui Financial plunged 5 percent after it agreed to sell SMBC Rail Services to ITE Management L.P. for an undisclosed amount.

SoftBank lost 3 percent after WeWork, a startup backed by the company, filed for bankruptcy. Nintendo surged over 6 percent after raising its annual forecast.

Seoul stocks fell on concerns surrounding the country’s ban on short selling. The Kospi shed 0.9 percent to end at 2,421.62 due to a selling spree by foreign and retail investors. Battery stocks succumbed to heavy selling pressure, with Samsung SDI losing 3.4 percent.

Australian markets edged up slightly as financials and technology stocks rose on optimism that top central banks are done with their monetary policy tightening.

The benchmark S&P ASX 200 Index rose 0.3 percent to 6,995.40, while the broader All Ordinaries Index ended 0.3 percent higher at 7,198.40.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index fell 0.7 percent to 11,151.30.

Europe

European stocks are subdued on Wednesday as investors react to a slew of earnings updates and look ahead to a speech by Fed Chair Jerome Powell for direction.

In economic news, Germany’s consumer price inflation slowed sharply in October to hit the lowest in more than two years, final data from Destatis showed.

The consumer price index rose 3.8 percent year-on-year following a 4.5 percent increase in the previous month. This was the lowest rate since August 2021 and matched the flash estimate published on October 30.

While the French CAC 40 Index has risen by 0.4 percent, the German DAX Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

Marks and Spencer has surged after reporting a significant increase in its half-year statutory pre-tax profit for 2023.

Serco has also risen after winning a £200 million contract to deliver electronic monitoring services for the Ministry of Justice.

Credit Agricole has also moved to the upside after delivering better-than-expected third-quarter earnings.

Continental AG has also rallied after reporting higher earnings and slightly raising its outlook for the tires business.

Commerzbank has also jumped after is third quarter net profit more than tripled.

Meanwhile,sShares of ABN AMRO have moved sharply lower after the Dutch bank’s third quarter net interest income missed estimates.

Persimmon has also moved to the downside after naming Andrew Duxbury as its next chief financial officer.

U.S. Economic Reports

Federal Reserve Chair Jerome Powell is scheduled to deliver opening remarks at the Division of Research and Statistics Centennial Conference at 9:15 am ET.

At 10 am ET, the Commerce Department is due to release its report on wholesale inventories in the month of September. Wholesale inventories are expected to come in unchanged.

The Treasury Department is scheduled to announce the results of this month’s auction of $40 billion worth of ten-year notes at 1 pm ET.

At 1:40 pm ET, New York Federal Reserve President John Williams is due to speak before a hybrid “Research and Statistics at 100: A Look at the Past, Present, and Future” event.

Federal Reserve Vice Chair for Supervision Michael Barr is scheduled to participate in a “Community Reinvestment Act” discussion before the National Association of Affordable Housing Lenders Annual Policy & Practice Conference at 2 pm ET.

At 4:45 pm ET, Federal Reserve Vice Chair Philip Jefferson is due to give closing remarks before the Division of Research and Statistics Centennial Conference.

Stocks In Focus

Shares of Robinhood Markets (HOOD) are moving sharply lower in pre-market trading after the online brokerage reported third quarter revenues that missed analyst estimates.

E-commerce giant eBay (EBAY) may also come under pressure after reporting better than expected third quarter earnings but providing disappointing guidance.

Meanwhile, shares of Rivian (RIVN) are seeing significant pre-market strength after the electric vehicle maker reported better than expected third quarter results and raised its full-year production forecast.