The futures linked to the DOW JONES fell 0.36% to 38,729 points, while those of the S&P 500 lost 0.23%, to 5,348 points. NASDAQ 100 futures fell 0.25% to 19,024 points.
These movements come after a quiet day yesterday on Wall Street, with a session from less to more that saw how The S&P 500 and the Nasdaq finally showed very slight advances at the close, but enough to set new all-time highs.. The Dow Jones rose almost 0.2%.
All eyes are on today’s start Federal Reserve monetary policy meetingalthough the interest rate announcements and subsequent conference by Chairman Jerome Powell will not arrive until tomorrow, Wednesday.
While investors are eagerly awaiting this quote, the truth is that they are largely pricing in rates remaining unchanged in the range between 5.25% and 5.50%. In fact, fed funds futures indicate there is virtually no chance of a cut not only at this week’s meeting, but also at the July one, according to CME’s FedWatch tool.
“Even if we only take a cut this year, I think we are simply cashing out,” explains Wei Li, chief global investment strategist at BlackRock, speaking to Bloomberg TV. “The stock market can handle it because we are really focusing on earnings and growth, which have been driving stocks more than rates this year.”
Before the Federal Reserve’s decision, investors will also know on Wednesday the reading of the consumer price index (CPI) for May. Economists surveyed by Dow Jones anticipate an increase of 3.4% year-on-year and 0.1% compared to April. That compares with increases of 3.4% and 0.3%, respectively, in the previous reading. The core CPI, which excludes volatile food and energy prices, is also expected to show an increase of 3.5% year-on-year and 0.3% month-on-month. Previously, it gained 3.6% and 0.3%, respectively.
“We have two big events coming up in the middle of this week: the CPI release on Wednesday morning and the Federal Reserve meeting on Wednesday afternoon,” explains Zachary Hill, head of portfolio management at Horizon Investments. “We are a little bit waiting for them to arrive.”
Today investors learned that U.S. small business confidence rose in May to its highest levels of the year. The National Federation of Independent Business (NFIB) has announced that its small business optimism index rose eight tenths of a point to 90.5 last month, the second consecutive month it rose after falling in March to the lowest level since December 2012. Despite the gain, it was the 29th consecutive month that the index was below the 50-year average of 98.
Additionally, the NFIB uncertainty index rose nine points to 85, the highest reading since November 2020, the month in which the last US presidential election took place.
In the business field, one of the protagonists is Apple, after yesterday the company announced at its developers conference a decided commitment to artificial intelligence, including ChatGPT in Siri within the new iOS 18. The software, which requires at least an iPhone 15 Pro or Pro Max to operate, may encourage a cascade of new purchases starting in the fall, analysts say. What already happened could be repeated with the launch of the iPhone 12 by Apple in 2020, which attracted consumers largely thanks to 5G connectivity.
DXC Technology shares rise almost 4% in pre-market after Reuters reported that Apollo Global and Kyndryl Holdings will make a joint bid for the company. The offer could range between $22 and $25 per share.
On the corporate earnings front, traders will closely follow the results of Oracle and Rubrik, although they will have to wait until the close of the regular session.
In raw materials markets, US West Texas futures fell 0.45% to $77.39 per barrel, while the benchmark Brent in Europe is paid at $81.31, with a decrease of 0. 39%.
Prices have risen more than 3% yesterday due to expectations that the summer vacation season in the northern hemisphere will boost demand for black gold.
In fixed income, bond yields fall slightly while awaiting the Fed meeting. The yield on the ten-year bond falls three points to 4.435%, while the two-year bond offers a yield of 4.849%.
The euro fell 0.26% against the dollar, leaving the exchange rate at 1.0737 dollars for each single currency.
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