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Dow futures fall just 10 pts; caution ahead of upcoming Fed meeting

Published 07/06/2023, 12:12
Updated 07/06/2023, 12:12
© Reuters

Investing.com -- U.S. stocks are seen opening largely unchanged Wednesday, consolidating recent gains amid uncertainty over the global economic outlook ahead of next week’s Federal Reserve policy-setting meeting.

At 06:55 ET (10:55 GMT), the Dow Futures contract was down 10 points, or 0.1%, S&P 500 Futures traded 2 points, or 0.1%, higher, while Nasdaq 100 Futures traded largely flat.

The main Wall Street indices closed marginally higher Tuesday, with the broad-based S&P 500 index adding 0.2% to its strongest level since August 2022. The tech-heavy Nasdaq Composite gained 0.4%, registering its highest close this year, while the blue chip Dow Jones Industrial Average gained just 10 points.

These gains follow last week’s blowout rally on the back of the agreement to lift the U.S. debt ceiling and Friday’s stellar jobs report

The Organization for Economic Co-operation and Development lifted its forecast for global growth this year, expecting the world's gross domestic product to expand by 2.7%, up slightly from its previous projection of 2.6%, citing lower energy prices and the re-opening of China’s economy.

However, when not including the pandemic-hit year of 2020, this would still be the lowest yearly rate since the 2008-2009 financial crisis, the OECD noted.

And trade data from China, released earlier Wednesday, showed that its exports contracted by more than expected in May, in a fresh sign of the headwinds facing the recovery of the world's second-biggest economy.

Additionally, there remains uncertainty over what the Federal Reserve will decide to do with its interest rate-hiking cycle when it meets next week.

Futures traders are putting the possibility of a pause at around 79%, though there is still an expectation the Fed could resume its rate hikes at the July meeting as inflation remains elevated.

A pause would let policymakers assess the progress of their 10 rate increases since last year, bringing the Fed funds rate from near zero to over 5%. 

In corporate news, Coinbase (NASDAQ:COIN) stock rose 2% premarket, rebounding slightly from a sharp decline on Tuesday after the Securities and Exchange Commission sued the firm over operating an unlicensed exchange. 

Stitch Fix (NASDAQ:SFIX) stock gained over 7% after the online personal styling company reported better-than-expected third-quarter results, while restaurant chain Dave & Buster’s Entertainment (NASDAQ:PLAY) stock gained over 4% as its first-quarter earnings impressed.

The earnings season is coming to a close, but numbers are still expected Wednesday from the likes of spirits maker Brown Forman (NYSE:BFb), packaged foods giant Campbell Soup (NYSE:CPB) and video game retailer GameStop (NYSE:GME).

Oil prices reversed early losses Wednesday, as the positive OECD report overturned the weak sentiment generated by the weak Chinese trade data.

Traders will also study the official report on weekly U.S. crude stocks, due later in the session, after industry data released late Tuesday showed crude inventories shrank more than expected last week.

By 06:55 ET, U.S. crude futures traded 1.1% higher at $72.56 a barrel, while the Brent contract climbed 1.1% to $77.13. 

Additionally, gold futures fell 0.1% to $1,978.75/oz, while EUR/USD traded 0.2% higher at 1.0718.

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