Thursday May 2nd

2-05-2019

US stock futures signal a muted open as Wall Street digests Powell comments

U.S. stock index futures pointed to a slow start to Thursday’s session, as market participants digested comments from the Federal Reserve. Around 8:39 a.m. ET, Dow Jones Industrial Average futures indicated a loss of 22 points while S&P 500 pointed to a flat open. Nasdaq 100 futures pointed to slight gains. The muted moves come after Fed Chairman Jerome Powell said Wednesday that recently low inflation pressures may just be “transitory,” hinting that a rate cut may not be on the horizon. Powell’s comments sent stocks tumbling, with the Dow closing more than 150 points lower. “He wanted to make the betting books on a Fed rate cut more balanced, and he did,” said Steven Blitz, chief U.S. economist at TS Lombard, in a note. “Powell restated his determination to be patient on inflation - down or up - before acting, suggesting that the Fed’s preemptive moment for this cycle may very well have come after the December rate hike.” Powell’s comments followed the Fed’s decision to leave rates unchanged, citing lackluster inflation. Ahead of the meeting, President Donald Trump had asked the central bank to cut rates and increase stimulus. Meanwhile, earnings season continued with companies like Square reporting better-than-expected results on Wednesday after the close. However, the stock fell more than 4% in the premarket as Square issued weaker-than-expected guidance for the second quarter. Under Armour and Dunkin’ Brands reported better-than-expected results on Thursday. Their shares rose 6.7% and 2.1%, respectively. Tempur Sealy also rose 4.7% on stronger-than-forecast results. More than half of the S&P 500 has reported calendar first-quarter earnings and the results have largely outperformed expectations. According to FactSet, 74.7% of the S&P 500 companies have beaten earnings estimates. The strong results pushed equities to record highs. The S&P 500 hit an intraday record on Wednesday before closing lower while the Nasdaq reached an all-time high earlier this week. But stocks could face a tougher road ahead as the earnings season winds down, said Ilya Feygin, senior strategist at WallachBeth Capital. “We’re done with earnings season pretty much. All the Apples and the Googles have reported,” Feygin said. “I think this focus on single names is going to stop and we’re going to focus on the macro news, which to me is not that great as the earnings.” Stocks in Asia Pacific were mixed on Thursday, following the U.S. Federal Reserve’s overnight monetary policy decision and hints that the central bank is not considering a cut in interest rates at this moment. In Hong Kong, the Hang Seng index added 0.84%, as of its final hour of trading. South Korea’s Kospi gained 0.42% to end its trading day at 2,212.75. Markets in China and Japan are closed for holidays. Oil prices fell on Thursday, pulled down by a surge in U.S. crude stockpiles due to higher crude imports, a drop in refining activity and strong weekly output from the world’s largest producer. Brent crude oil futures were down $1.09, or 1.5%, at $71.09 per barrel around 8:50 a.m. ET (1250 GMT). Brent is set for a weekly loss, which would break its longest string of weekly gains for a year. U.S. West Texas Intermediate crude futures were down $1.15, or 1.8%, at $62.45 per barrel. Gold fell to its lowest in a week on Thursday, as the U.S. Federal Open Market Committee (FOMC) doused expectations of a near-term rate cut and on lack of physical demand in Asia. Spot gold shed 0.4 percent to $1,270.86 per ounce. It fell to $1,269.69, its lowest since April 24, earlier in the session. U.S. gold futures fell 0.9 percent to $1,272.70 an ounce.