U.S. stock futures are suggesting the major indexes will start today’s session on the downside. In overnight trading, markets in Asia closed in the loss column. Meanwhile, the major European indexes are trading in the red. Elsewhere, oil prices are also headed lower, with West Texas Intermediate down about 0.8%, to around $71.20 a barrel.
Stocks resumed the holiday-shortened week with modest losses, as investors pored over the minutes from the Federal Reserve’s June policy meeting, which indicated more rate hikes are likely on the way. However, it appears the central bank will tread more carefully in the months ahead. Due to a lag effect, it remains to be seen if the Fed’s 10 consecutive rate hikes (making for a five percent increase overall) have created enough momentum to bring inflation down to the lead bank’s 2% target. As it stands, the consensus is calling for a quarter-percent increase when the Fed meets again later this month. That would raise the overnight target lending rate to between 5.25% and 5.50%, marking the highest level in 22 years.
As the Federal Reserve’s next steps will be largely “data driven”, market participants will be keeping a close eye on upcoming economic reports for clues. Notably, the job market remains fairly tight, as suggested by payroll processor ADP’s strong-than-expected report on private sector jobs this morning. Later today, we will get the report on job openings for May, where the Street is calling for a slight downtick, to 10 million. Also, the Institute for Supply Management will be releasing its Services Index for June. Consensus there is calling for a reading of around 51.3%, up from 50.3% in May. (Percentages above 50 indicate expansion in activity, while those below 50 show contraction.) Also on the employment front, the Labor Department will release its June figures for nonfarm payrolls on Friday, with the number of new positions anticipated to come in around 240,000, down from May’s tally of 339,000. That same day, we’ll get the U.S. unemployment rate for June, which is expected to inch lower to 3.6%, versus 3.7% the prior month.
Summing up Wednesday’s price moves, the Dow Jones Industrials fell 129 points, or 0.4%, the S&P 500 was down eight points (0.2%), and the tech-heavy NASDAQ declined 25 points (0.2%). - Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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