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Dow futures slip ahead of Powell's reappearance; Amazon in focus

Published 22/06/2023, 11:58
© Reuters.
- -- U.S. stock futures are trading lower Thursday, as the recent tech-inspired rally loses steam with Fed chief Jerome Powell maintaining his view that future rate hikes look likely as the year progresses.

By 06:45 ET (10:45 GMT), the Dow Futures contract was down 90 points, or 0.3%, S&P 500 Futures traded 12 points, or 0.3%, lower and Nasdaq 100 Futures dropped 55 points, or 0.4%.

The main Wall Street indices closed lower Wednesday, with the tech-heavy Nasdaq Composite leading the losses, dropping 1.2% and suffering its worst daily performance since early June.

Powell heads to Capitol Hill, again

These losses followed Federal Reserve Chair Jerome Powell repeating his view that the U.S. central bank has not finished tightening monetary policy after last week’s pause in its 15-month credit tightening campaign, indicating that two more rate increases were likely this year.

Powell returns to Congress later in the session for his second day of testimony, this time appearing before the Senate Banking Committee.

Investors will be looking to see if he deviates at all from his previous guidance, particularly after dissent from his colleague Raphael Bostic, with the Atlanta Fed president opining that the Fed should keep interest rates unchanged for the rest of the year and it assesses the progress already done.

Investors will also be able to study the latest labor market data, with weekly jobless claims for last week due later in the session. Analysts are expecting initial claims to be 260,000, about even with the week earlier.

European central banks continue to hike

While there is still debate about what the Fed does next, there is far less ambiguity in Europe.

The Swiss National Bank raised rates by 25 basis points earlier Thursday, as expected, Norway's central bank surprised with an aggressive 50 bps hike, and the Bank of England is widely expected to increase its benchmark interest rate for the 13th consecutive time later in the session.

Turkey is also expected to tighten monetary policy in a post-election macroeconomic policy reset.

Amazon linked with Ocado bid

In corporate news, Darden Restaurants (NYSE:DRI) is expected to report earnings during the session, with analysts likely to focus on what executives say about consumer spending trends at the restaurant chain.

Amazon (NASDAQ:AMZN) could also be in the spotlight after a report in the Times newspaper indicated that the online retail giant could make a takeover bid for British online grocery group Ocado (LON:OCDO).

Additionally, the U.S. Federal Trade Commission on Wednesday accused Amazon of enrolling millions of consumers into its paid subscription Amazon Prime service without their consent.

Oil lower; U.S. crude inventories provide support

Crude prices retreated, handing back some of the previous session’s gains amid ongoing concerns over global demand growth.

By 06:45 ET, Crude Oil WTI Futures were 1.8% lower at $71.25 a barrel, while the Brent contract fell 1.7% to $75.78 per barrel.

Both benchmarks had gained a dollar a barrel in the previous session after the industry-funded American Petroleum Institute released data indicating that U.S. crude stockpiles dropped by more than 1 million barrels last week, reflecting some strength in demand at the world’s largest consumer.

Official inventory figures from the Energy Information Administration are due later on Thursday.

However, the market remains cautious with western central banks continuing to tighten monetary policy, hitting future economic activity, and with ongoing concerns over an economic recovery in China, the world’s largest crude importer.

Additionally, gold futures fell 0.4% to $1,937.90/oz, while EUR/USD traded 0.1% higher at 1.1003.

(Oliver Gray contributed to this item.)

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