U.S. stocks edge higher; solid earnings season continues
Investing.com - U.S. stock futures tick higher as the benchmark S&P 500 index remains within striking distance of an all-time high. President Donald Trump is reportedly toying with the idea of naming a replacement to Federal Reserve Chair Jerome Powell later this year, as Trump’s frustration with the central bank’s cautious policy decisions grows. Elsewhere, BYD shares dip on a media report that the Chinese electric car giant’s production has decelerated, while Shell denies reports that it is considering a purchase of rival BP (NYSE:BP).
1. Futures rise
U.S. stock futures pointed higher on Thursday, with the S&P 500 hovering just below record high levels reached in February.
By 03:10 ET (07:10 GMT), the Dow futures contract had risen by 84 points, or 0.2%, S&P 500 futures had increased by 14 points, or 0.2%, and Nasdaq 100 futures had climbed by 74 points, or 0.3%.
The main averages on Wall Street ended in mixed fashion on Wednesday, pausing a two-day rally, as investors gauged a ceasefire between Israel and Iran and assessed testimony from Federal Reserve Chair Jerome Powell.
Attention is now turning to the release of the key personal consumption expenditures price index on Friday. The Fed’s preferred inflation metric comes after Powell backed a wait-and-see approach to future interest rate decisions in his comments to Congressional lawmakers this week. Some policymakers, including Powell, have argued that this strategy is appropriate until more clarity emerges around the impact of aggressive U.S. tariffs on the broader economy.
"Markets seem to be trusting the ceasefire [...], and the dollar is back to testing its lows. Expect U.S. data to play a bigger role from here, especially since Fed Chair Powell’s cautious stance during his Congressional testimony included some subtle dovish hints," analysts at ING said in a note.
2. Trump comments on potential Powell replacement
Powell’s commitment to the Fed’s take-it-slow approach to policy has been frequently criticized by President Trump, who is eager to see the central bank follow many of its global counterparts in quickly slashing rates.
Not doing so is costing the government hundreds of billions of dollars in interest payments, Trump has claimed.
These comments, which have been regularly lobbed for much of the year and on Wednesday even included jibes at Powell’s mental capacity, have raised speculation that the president may soon move to replace him.
Trump suggested to reporters on Wednesday that he has narrowed down a list of potential successors to three or four people. The Wall Street Journal also reported that an exasperated Trump is mulling potentially selecting and announcing the replacement by September or October. The paper added that Trump’s anger with Powell could even prompt him to unveil the decision sometime this summer.
3. BYD slips on report of slowing production
Hong Kong-listed shares of Chinese electric vehicle leader BYD (HK:1211) (SZ:002594) fell more than 2% after a Reuters report revealed the company has slowed production and postponed its expansion plans, reversing its aggressive growth strategy.
Citing people familiar with the matter, the report detailed that BYD has cancelled night shifts and cut output by at least one-third at four of its Chinese factories. It also delayed the addition of new production lines, measures aimed at managing rising inventory and reducing costs.
BYD’s stock sank last month after the EV maker’s price cuts intensified concerns over rising competition and narrowing profit margins in the massive Chinese auto market.
Although BYD overtook Tesla (NASDAQ:TSLA), selling a record 4.27 million vehicles last year and targeting to reach 5.5 million this year, it has faced mounting pressure from swelling dealer inventory despite deep price cuts, the report said.
4. Shell says it is not mulling BP purchase
Oil major Shell has denied it was planning a takeover of peer BP, saying it is not pursuing a bid and is not actively considering one.
The company also said that under U.K. regulations, making such a statement prevents it from releasing a formal offer for the next six months.
The response came after a Wall Street Journal report on Wednesday claimed Shell was in discussions to acquire BP.
“In response to recent media speculation Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer,” the oil giant said in the release.
“This is a statement to which Rule 2.8 of the Code applies and accordingly Shell confirms it has no intention of making an offer for BP. As a result Shell will be bound by the restrictions set out in Rule 2.8 of the Code,” it added.
The WSJ had reported that Shell was in “early-stage talks” to buy BP, citing sources familiar with the matter. The report said that the discussions between the two companies are “active,” with BP said to be weighing the approach “carefully."
5. Oil inches higher
Crude prices rose, adding to the previous session’s gains, as a larger-than-expected draw in U.S. crude stocks signalled firm demand from the world’s largest consumer.
At 03:40 ET, Brent futures climbed 0.2% to $66.54 a barrel and U.S. West Texas Intermediate crude futures rose 0.1% to $65.00 a barrel.
Both benchmarks climbed nearly 1% on Wednesday, recovering from early-week losses after data showing U.S. crude oil inventories falling for a fifth straight week, indicating resilient demand in the world’s largest economy.
U.S. crude inventories fell by 5.8 million barrels, the Energy Information Administration said on Wednesday, and gasoline stocks unexpectedly fell by 2.1 million barrels, as gasoline supplied, a proxy for demand, rose to its highest since December 2021.