US Stock Futures Negative Ahead of Fed Minutes Release

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Principal Points

• Futures contracts on major indexes are in the red ahead of Wednesday’s open
• Minutes from the last meeting of Fed officials to provide insight into monetary policy steps

Stock futures tied to the major averages are trading mildly negative in pre-market moves on Wednesday. The calm futures environment arrived after a steep drop in stocks ended a 5-day record run for the Dow and the S&P500.

Dow Jones Industrial Average futures lost about 70 points in overnight activity. S&P500 futures are slightly in the red, along with futures on the Nasdaq Composite.

Renewed market jitters on Tuesday roiled the major stock gauges. All three main indexes turned lower on the day, following a significant drop in the July retail sales report. The Dow Jones lost 282 points as cyclical and retailers weighed on the index. Home Depot’s 4.3% drop was among the biggest declines in the 30-stock benchmark.

The S&P500 erased 0.71% on its worst day since mid-July. The broad-market index, and the Dow Jones, had their first negative session after five consecutive days each marked by a new all-time high. The Nasdaq Composite resumed its slide on Tuesday and lost 0.93%. Big tech names, including Google’s Alphabet, Facebook, Tesla, and Amazon, all closed lower by 1% or more.

Disappointing data from the US Commerce Department lingered on the positive sentiment for stocks. Retail sales for July fell by 1.1%, a sign of decreasing purchases of goods at stores, restaurants, and online. The pullback was partly attributed to the recent rise in Covid-19 cases in the US caused by the spread of the Delta variant.

The expected drop in July’s retail sales figures was 0.3% on a monthly basis. In comparison, June’s retail sales gained 0.7%. Excluding autos, retail sales for July declined 0.4%.

Delta Variant Concerns

Uncertainty over the economic activity in the US is bound to continue, according to Federal Reserve Chairman Jerome Powell. Speaking in a town hall meeting with educators and students on Tuesday, the Fed chief said it is unclear how the recent surge in Delta strain cases will affect the US economy.

“The Covid pandemic is still casting a shadow on economic activity. It is still very much with us,” Mr. Powell said in his remarks during the virtual meeting.

While the Fed Chair did not comment on the central bank’s monetary policy, investors globally will be looking to find out more about Fed’s forward guidance in the anticipated minutes from the latest Fed meeting. The meeting summary, to be released today, is expected to contain a glimpse into the Fed’s next steps toward easing the bountiful monetary support of $120bn a month in bond purchases.

Meanwhile, stocks in Europe gained in the early hours of Wednesday’s trading but later skittered down to unchanged levels. The region-wide Stoxx 600 lost about 0.1% in early deals, while indexes of individual economies in the bloc are in the red.

Cryptocurrencies today are hovering near unchanged levels. Bitcoin’s price remains consolidated around $45,000 per coin. Ether is also trading sideways on Wednesday, currently below the $3,100 threshold.

Gold resumed its upside swing in the morning, following a strong start of the week. The precious metal has advanced nearly 0.9% since Monday, adding to last week’s gain of 1%. Gold prices reached a weekly session high yesterday, climbing to $1,796 per troy ounce.