U.S. stock futures edge lower as Fed decision, retail sales data loom

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U.S. stock futures were flat to lower on Wednesday, with signs that technology stocks will see the most pressure as markets await a decision by the Federal Open Market Committee later in the session.

How are stock-index futures trading?
  • S&P 500 futures
    ES00
    were flat at 4,626

  • Dow Jones Industrial Average futures
    YM00
    fell than 0.1% to 35,419

  • Nasdaq-100 futures
    NQ00
    dropped 0.1% to 15,899

All three benchmarks saw a second straight day of losses on Tuesday, with the Dow Jones Industrial Average 
DJIA
falling 106.77 points, or 0.3%, to close at 35,544.18. The S&P 500
SPX
slipped 0.8% to finish at 4,634.09. The Nasdaq Composite 
COMP
 dropped 1.1%, to end at 15,237.64.

What’s driving the markets?

Stocks have seen a tough start to the week as investors brace for the outcome of the Federal Reserve meeting, due at 2 p.m. Eastern Time, with a news conference to follow at 2:30 p.m. by Fed Chairman Jerome Powell.

The central bank is expected to announce a faster reduction in the pace of its bond buying to combat rising inflation, and with that faster taper will come expectations of higher interest rates. The latter has put particular pressure on growth-focused technology stocks, which are more sensitive to interest rate changes.

Read: 5 things to watch for when the Federal Reserve announces its policy decision Wednesday

The Nasdaq has lost around 2% this month so far, lagging a 3% rise for the Dow industrials and a 1.5% gain for the S&P 500.

“Most interesting will be any signaling on where the Fed sees core PCE inflation next year and in 2023 and the degree to which Fed members have raised their policy rate forecasts relative to what the market is predicting, which is for between two and three rate hikes through the end of next year,” said Peter Garnry, head of equity strategy at Saxo Bank, in a note to clients.

Investors will also be on the lookout for any Fed comments on the effect of the fast-spreading omicron variant on the U.S. economy. The death toll in the U.S. has now surpassed 800,000 from COVID-19, and a study from the Centers for Disease Control and Prevention has reportedly warned of a surge in cases, peaking in mid-January that could overwhelm undervaccinated communities.

Ahead of the Fed meeting, investors will get U.S. November retail sales data and import prices, along with the Empire State manufacturing index for December, all at 8:30 a.m. Eastern. The National Association of Home Builders index for December, along with business inventories for October are scheduled for release at 10 a.m. Eastern.

What companies are in focus?
  • Shares of Lowe’s
    LOW
    fell 3.7% in premarket trading after the DIY retailer’s 2022 guidance fell short of forecasts.

  • Eli Lilly stock
    LLY
    rose 5% after the pharmaceutial group lifted guidance with an update on its drug pipeline.

How are other assets trading?
  • The yield on the 10-year Treasury note 
    BX:TMUBMUSD10Y
     rose 1 basis points to 1.448%. Treasury yields and prices move in opposite directions.

  • The ICE U.S. Dollar Index  
    DXY,
      a measure of the currency against a half-dozen other monetary units, was off less than 0.1%.

  • In oil futures, West Texas Intermediate crude 
    CL00
     for January
    CLF23
    delivery declined 1.4% to $69.73 a barrel.

  • Gold futures 
    GC00
    for February delivery 
    GCG22
     fell 0.1% to $1,770.20 an ounce.

  • The Stoxx Europe 600 Index 
    XX:SXXP
    rose 0.4%, while London’s FTSE 100 Index  
    UK:UKX
    lost 0.3%.

  • In Asia, the Shanghai Composite Index 
    CN:SHCOMP
    fell 0.4%, while the Hang Seng Index 
    HK:HSI
    fell 0.9% in Hong Kong. China’s CSI 300  
    XX:000300
    dropped 0.8%. Japan’s Nikkei 225 Index 
    JP:NIK
    was flat.

source

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