Investors turn cautious at the start of the second half
US equity futures traded lower on Wednesday as investors prepared for a busy day of economic events, including comments from Federal Reserve Chair Kevin Warsh, fresh manufacturing data and diplomatic developments involving the US and Iran.
At 03:16 ET, Dow Jones futures were down 202 points, or 0.4%, while S&P 500 futures declined 33 points and Nasdaq 100 futures fell 195 points, representing losses of 0.4% and 0.6%, respectively.
Wall Street finished Tuesday’s session in positive territory, with technology stocks leading gains after a volatile second quarter. The Philadelphia Semiconductor Index also posted another strong advance, completing its best quarterly performance since its launch in the early 1990s.
Labour market strength keeps rate hike expectations alive
Recent US economic data painted a mixed picture.
Job openings for May exceeded forecasts, while housing and consumer confidence indicators weakened. Combined with hawkish remarks from Cleveland Fed President Beth Hammack, the stronger labour market data reinforced expectations that the Federal Reserve could still raise interest rates as early as July.
Markets await policy clues from Kevin Warsh
Attention will centre on Kevin Warsh’s appearance at the ECB Forum on Central Banking in Sintra later today.
Since taking over from Jerome Powell, Warsh has suggested the Federal Reserve could reduce its reliance on forward guidance and reassess the way it communicates monetary policy.
Investors will also be listening closely for his assessment of inflation and economic growth, particularly after easing oil prices reduced some concerns over energy-driven inflation following the preliminary US-Iran agreement.
Geopolitics and manufacturing data remain in focus
Diplomatic talks involving US and Iranian representatives in Qatar are also being monitored closely, although officials have confirmed that no direct high-level negotiations are currently scheduled.
Meanwhile, economists expect the ISM Manufacturing PMI to edge down slightly to 53.8 in June from 54.0 in May, while the ADP employment report will provide another snapshot of the US labour market ahead of Thursday’s official payrolls release.
Nike disappoints despite earnings beat
Nike (NYSE:NKE) shares declined in premarket trading after the company warned that its turnaround remains in its early stages.
Although quarterly revenue exceeded expectations, continued weakness in China weighed on overall performance.
Chief Executive Elliott Hill told investors that results “aren’t there yet,” adding that the company is not “living up to our full potential.”
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