US stock futures showed minimal change on Wednesday as investors awaited key economic data and the release of the Federal Reserve's meeting minutes from June. The equity market closed early on Wednesday and will remain shut on Thursday for the US Independence Day holiday. Before the opening bell, reports on ADP National Employment and weekly jobless claims were due, following data that showed higher job openings and layoffs in May. Market participants see a 65% chance of the first rate cut in September, and around two cuts by year-end. Other data points on the watchlist include factory orders and services PMIs. Tesla rose 2.7% premarket after hitting its highest level since January on Tuesday, while Nvidia slipped 0.6%. Other megacaps like Alphabet, Microsoft, Meta Platforms, and Amazon inched up between 0.2% and 0.6%. Dow e-minis were up 42 points, or 0.11%, S&P 500 e-minis were up 1.5 points, or 0.03%, and Nasdaq 100 e-minis were up 2.5 points, or 0.01%. Paramount Global jumped 11.7% after a preliminary deal to sell its controlling interest in the media giant to Skydance Media. U.S. stock index futures edged up, buoyed by a softening economy that raises hopes of a possible interest rate cut in September. Major Wall Street indexes are poised for weekly gains, driven by strong technology stocks. The Labor Department’s upcoming employment report and remarks by Federal Reserve officials are key factors being closely monitored by investors. The ADP Employment report and weekly jobless claims earlier this week signaled easing labor market conditions, while a measure of services sector activity dropped to a four-year low and factory orders slumped unexpectedly. Market participants have strengthened their bets for rate cuts this year, with chances of a 25-basis-point cut in September rising to 68%. The Dow, S&P 500, and Nasdaq are all set for weekly gains. Tesla and Macy's are among the early premarket movers. Cryptocurrency-related stocks including Coinbase Global, Riot Platforms, and Marathon Digital lost 7%-8% after bitcoin slumped to an over four-month low.
US employers added 206,000 jobs in June, according to the latest report. However, the unemployment rate ticked up to 4.1%. The job market continues to show signs of strength, but the slight increase in the unemployment rate suggests that more people are entering the labor force. The Federal Reserve has emphasized its political independence, stating that it will make decisions based on economic data and not political pressure. The stock market rose on hopes of rate cuts, with investors anticipating a possible interest rate cut in September. In retail news, the parent company of Saks Fifth Avenue has announced plans to buy Neiman Marcus for $2.65 billion. This acquisition could have significant implications for the luxury retail industry. In international trade, the European Union has announced plans to increase tariffs on Chinese electric vehicles. This move is seen as a response to China's trade practices and could further escalate tensions between the two economic powers. Chinese automaker BYD has opened its first electric vehicle plant in Thailand, signaling the company's expansion into Southeast Asia. In the US, air travel complaints have increased, highlighting ongoing challenges in the airline industry. In New Zealand, zoning rules have been eased in an effort to address the housing shortage. This move could lead to increased housing development and potentially alleviate the housing crisis. Afghanistan has announced plans to modernize its postal service, aiming to improve efficiency and expand services. In transportation news, rail cars carrying hazardous material derailed and caught fire in North Dakota, raising concerns about the safety of transporting hazardous materials by rail.
The US non-farm payrolls report for June showed a headline result of +206,000 larger employment, more than the +190,000 expected. However, there were downward revisions to the prior month's data. Average hourly pay hit US$30 for the first time ever in June, up +4.0% from a year ago. In Canada, their labour market report for June showed a trivial -1,400 increase in employed jobs when a +22,500 rise was expected. Japan's Government Pension Investment Fund booked a +NZ$462 billion gain in the past year. The US Fed is likely to be pleased with the slowing US labour market. The next US Fed rate review is on August 1, 2024 NZT. The French election outcome is uncertain. The fear and greed index is in the 'neutral' range. The price of gold is up to US$2390/oz. Oil prices are down. The Kiwi dollar is at 61.4 USc. The bitcoin price is down to US$56,536. Wall Street is higher. European markets were mixed. The UST 10yr yield is at 4.28%.
Investors will be closely watching the release of June’s Consumer Price Index (CPI) on Thursday as the case builds that the Federal Reserve could be set to cut interest rates in September. Semiannual testimony from Federal Reserve Chair Jerome Powell before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday will also be a key focus for investors. On the corporate side, Friday morning will see some of America’s largest financial institutions, including JPMorgan (JPM), Wells Fargo (WFC), and Citi (C), kick off second quarter earnings season. Results from PepsiCo (PEP) and Delta Air Lines (DAL) will also be in focus earlier in the week. Last week, the S&P 500 rose nearly 2% while the Nasdaq Composite rallied over 3%. Both finished the week at record highs. The Dow Jones Industrial Average gained a more modest 0.5%. The June jobs report showed the US economy added more jobs than expected last month. But economists found several signs of a slowing labor market in the details of the report. Several economists believe this print will lead the Federal Reserve to cut interest rates in September. Wall Street economists expect headline inflation rose just 3.1% annually in June, a slowdown from the 3.3% rise seen in May. Earnings season is upon us again, and Financials will be in particular focus over the next few weeks; 40% of the S&P 500 companies set to report over that period will be from the sector. The sector isn’t expected to be a leader in earnings growth this quarter, with analysts forecasting 4.3% year-over-year earnings growth in Q2. Consensus forecasts are for the S&P 500’s earnings to grow 8.8% against the year prior in the second quarter. With the market trading near record levels ahead of this reporting period, strategists are cautious about how much upside investors can expect if results top Wall Street expectations. Research showed that the S&P 500 rises 80% of the time during earnings season, with an average return of 2%. Economic data: New York Fed 1-year inflation expectations, June (3.17% prior). Earnings: No notable earnings releases. Economic data: NFIB Small Business Optimism, June (89.9 expected, 90.5 prior); Fed Chair Powell testifies before the Senate Banking Committee. Earnings: Helen of Troy (HELE). Economic data: MBA mortgage applications, July 5, (-2.6% prior), Wholesale inventories month-over-month, May final (0.6% prior); Fed Chair Powell testifies before the House Financial Services Committee. Earnings: Manchester United (MANU), WD-40 (WDFC), PriceSmart (PSMT). Economic data: Consumer Price Index, month-over-month, June (+0.1% expected, +0% previously); CPI excluding food and energy, month-over-month, June (+0.2% expected, +0.2% previously); Consumer Price Index, year-over-year, June (+3.1% expected, +3.3% previously); CPI excluding food and energy, year-over-year, June (+3.4% expected, +3.4% previously); Real Average Hourly Earnings, year-over-year, June (+0.7% previously); Real Average Weekly Earnings, year-over-year, June (+0.5% previously);Initial jobless claims, week ended July 6 (238,000 previously); Earnings: Conagra Brands (CAG), Delta Air Lines (DAL), PepsiCo (PEP), Progressive (PGR). Economic data: Producer Price Index, month-over-month, June (+0.1% expected, -0.2% previously); PPI, year-over-year, June (+2.2% previously); Core PPI, month-over-month, June (+0.1% expected, 0% previously); Core PPI, year-over-year, June (+2.3% previously); University of Michigan consumer sentiment, July preliminary (67 expected, 68.2 previously). Earnings: BNY Mellon (BK), JPMorgan (JPM), Citigroup (C), Wells Fargo (WFC).