Wednesday June 8th


Dow futures dip following two straight days of gains on Wall Street

U.S. stock index futures fell Wednesday after two consecutive days of gains on Wall Street. Futures on the Dow Jones Industrial Average dipped 142 points, or 0.4%. S&P 500 futures slipped 0.4%, and Nasdaq 100 futures lost 0.3%. The moves came as investors weighed updates from major companies and signs that economic growth may be slowing. Overseas, Credit Suisse issued a profit warning for the second quarter, citing tighter monetary policy and the war in Ukraine. Target, which issued its own warning on Tuesday, was downgraded to neutral from buy by Bank of America. Meanwhile, the Atlanta Federal Reserve’s GDPNow tracker showed a growth rate of just 0.9% for the second quarter, down from 1.3% last week. As the Federal Reserve continues to tighten monetary conditions, the concerns about economic growth and corporate earnings could have a bigger impact on stocks, Allianz chief economic advisor Mohamed El-Erian said on “Squawk Box.” “The markets have been taking this news much better than they would have otherwise, but if I were fully invested right now, I’d take some chips off the table. I would wait for me value to be created,” El-Erian said. All eyes will be on Friday’s consumer price index reading for May. Many believe the print will be crucial for the path of Fed policy and whether the central bank will keep raising rates in 50-basis-point increments. On the earnings front, shares of Ollie’s Bargain Outlet Holdings fell 6% in premarket trading after the discount retailer missed estimates for its first quarter. Campbell Soup, however, moved higher after a stronger-than-expected quarterly report. Action in the bond market may have hurt investor sentiment on Tuesday, as the 10-year Treasury yield jumped back above 3.03%. On Tuesday, investors shrugged off some signs of an economic slowdown ahead of a key inflation reading. The S&P 500 gained nearly 1%, rising for a second straight day. The 30-stock Dow advanced more than 260 points, Tuesday, while the tech-heavy Nasdaq Composite rose 0.9%. The stock market has had a roller-coaster year as the Fed’s aggressive rate hikes stoked recession fears. The S&P 500 is off nearly 14% from its all-time high reached in January. The equity benchmark briefly dipped into bear market territory on an intraday basis last month. “The question is whether this slower implied pace of tightening is attributable to the belief that the Fed will meet its policy goals or because the economy will be tipping into recession,” said Gargi Chaudhuri, head of iShares investment strategy at BlackRock. “We believe the US will avoid a recession.” In economic data, mortgage demand hit its lowest level in 22 years last week, according to the Mortgage Bankers Association. Shares in Asia-Pacific were higher on Wednesday, with Hong Kong leading gains regionally. The Hang Seng index in Hong Kong jumped 2.24% to close at 22,014.59 as Chinese tech stocks listed in the city soared: Alibaba surged 10.12% while Tencent climbed 6.47% and NetEase gained 5.66%. The Shanghai Composite in mainland China closed 0.68% higher at 3,263.79 while the Shenzhen Component climbed 0.818% to 12,033.26. In other markets, the Nikkei 225 in Japan advanced 1.04% to close at 28,234.29 while the Topix index climbed 1.18% to 1,969.98. South Korea’s Kospi closed little changed at 2,626.15. Oil prices rose on Wednesday, despite a likely rise in U.S. oil stocks, on the easing of Chinese Covid-19 related lockdowns and a possible strike by Norwegian oil workers. Brent crude futures were up $1.43, or 1..2%, at $122 a barrel. U.S. West Texas Intermediate crude was at $120.92 a barrel, up $1.51, or 1.3%. Gold prices edged lower on Wednesday as an uptick in the dollar and Treasury yields limited bullion’s appeal, with investors looking ahead to U.S. inflation data for more direction on interest rates. Spot gold was down 0.1% at $1,849.90 per ounce, while U.S. gold futures were flat at $1,852.70.