The stock market was slipping Wednesday ahead of a data dump due before the Thanksgiving holiday.
Futures for the Dow Jones Industrial Average indicated an open 125 points lower, after the index climbed 194 points Tuesday to close at 35,813. Futures for the S&P 500 and Nasdaq signaled a similar start lower, though the technology-heavy Nasdaq was set to be slightly stronger after two days of underperformance.
A wave of economic data is due Wednesday ahead of the Thanksgiving holiday—which will see stock markets closed Thursday and on shortened hours Friday.
The highlight will be the latest meeting minutes from the Federal Open Market Committee, which is the Federal Reserve’s monetary policy body. Investors will scour the minutes for, among other things, indications of how the central bank views inflation and whether members are inclined to adjust the pace of slowing monthly asset purchases.
“Today will see a tsunami of economic announcements, as well as positioning tidying ahead of the weekend, culminating in the release of the latest Fed minutes,” said Michael Hewson, an analyst at broker CMC Markets.
“While the minutes aren’t likely to deliver too much in the way of surprises they could act as a decent insight into the deliberations of the FOMC into the decision-making process when it came to deciding the amount of the initial taper,” Hewson added. “While the initial reduction of asset purchases was widely expected, an initial monthly reduction of $10 billion in Treasuries, and $5 billion in mortgage-backed securities, it will be interesting to find out how many FOMC members wanted to go faster.”
Sharing the spotlight with the FOMC minutes are jobless claims, durable goods orders, the trade deficit, personal income and spending, new home sales, and other economic indicators.
Pressuring equities this week has been a surge in bond yields, as investors viewed the renomination of Fed Chair Jerome Powell as potentially leading to a tightening in monetary policy and rate increase sooner than expected. The yield on the benchmark 10-year U.S. Treasury note was 1.65% Wednesday, marginally higher than the 1.63% it closed at Tuesday.
“We continue to believe that the Fed will not be compelled to overtighten financial conditions and will continue to balance developments in the labor market with their price stability objective,” said Mark Haefele, the chief investment officer at UBS Global Wealth Management. “As pandemic disruptions fade, we expect year-over-year rates of U.S. inflation to fall from 6.5% at the end of 2021 to 1.8% by the end of 2022.”
Overseas, Germany’s DAX fell 0.3%—while most European indexes were in the green—after the Ifo business climate indicator decreased for the fifth consecutive month. A resurgence in Covid-19 infections has hammered European stocks this week, as Austria headed into a new national lockdown and Germany appeared to be on the precipice of doing the same, but those fears seem to have subsided. The regional Stoxx 600 index was 0.1% higher.
Hong Kong’s Hang Seng Index rose 0.1% as Asian stocks matched Wall Street’s mixed performance Tuesday.
In commodity markets, oil prices were steadying after President Joe Biden announced that the U.S. and other countries would coordinate the release of crude from domestic stockpiles in an effort to tame prices.
Futures for international oil benchmark Brent were down 0.5% to around $81 a barrel, after surging some 3% Tuesday following the announcement. U.S. futures for West Texas Intermediate crude were similarly lower after Tuesday’s jump, trading hands around $78.50.
“Oil prices continued to be under the spotlight as a U.S.-led release of oil from strategic reserves failed to dampen commodity price inflation,” said Russ Mould, an analyst at broker AJ Bell. “The amount released is very small in the bigger scheme of things.”
Here are five stocks on the move Wednesday
Telecom Italia (TIT.Italy) jumped 9% in Milan amid reports that investment group KKR (KKR) was considering raising its bid for the company to woo key shareholder Vivendi (VIV.France). Vivendi shares lifted 1.3% in Paris.
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