U.S. index futures suggest a weaker open for Wall Street on Wednesday, following a mixed performance in the previous session. Rising treasury yields, particularly the ten-year note climbing above 4.5 percent, are contributing to market concerns about the outlook for interest rates in light of upcoming key inflation data.
The Commerce Department's report on personal income and spending for April, which includes the Fed's preferred inflation metrics, is scheduled for release this Friday. This data could significantly influence expectations ahead of the Federal Reserve's next monetary policy meeting on June 11-12.
Minneapolis Fed President Neel Kashkari emphasized in a CNBC interview that he needs to observe "many more months of positive inflation data" before considering a cut in interest rates. Although he doesn't vote on the Federal Open Market Committee this year, Kashkari also noted that raising rates isn't off the table if inflation remains persistent.
On Tuesday, the Nasdaq and the Dow displayed divergent trends before ending the session mixed. The Nasdaq, after dipping into negative territory in the afternoon, rebounded to close at a new record high of 17,019.88, up 99.09 points or 0.6 percent. The S&P 500 edged up by 1.32 points to 5,306.04, while the Dow fell by 216.73 points or 0.6 percent to 38,852.86.
The Nasdaq's rise was bolstered by Nvidia (NVDA), which soared 7.1 percent to a record close following robust fiscal first-quarter results, optimistic guidance, a ten-for-one stock split, and a 150 percent increase in its quarterly dividend to $0.10 per share.
In contrast, the Dow was dragged down by a 2.6 percent drop in Merck (MRK) shares. Investors remained cautious ahead of the upcoming inflation data, leading to subdued trading activity.
On the economic front, the Conference Board reported a surprising uptick in consumer confidence for May, with its index jumping to 102.0 from an upwardly revised 97.5 in April, contrary to economists' expectations of a decrease to 95.3.
Sector-wise, airline stocks fell sharply, bringing the NYSE Arca Airline Index down 2.0 percent to a four-month low. Housing stocks also weakened, as illustrated by a 1.3 percent decline in the Philadelphia Housing Sector Index. Conversely, gold stocks surged alongside the precious metal's price, lifting the NYSE Arca Gold Bugs Index by 2.2 percent. Oil service stocks similarly benefited from rising crude oil prices, pushing the Philadelphia Oil Service Index up by 1.7 percent. Semiconductor and computer hardware stocks also performed well, contributing to the Nasdaq's gains.
In commodity markets, crude oil futures are up $0.54 to $80.37 a barrel after gaining $2.11 to $79.83 in the previous session. Gold is trading at $2,364.30 an ounce, down $15 from the previous close of $2,379.30. On Tuesday, gold surged by $22.40.
In currency markets, the U.S. dollar is trading at 157.16 yen, consistent with Tuesday's close of 157.17 yen. Against the euro, the dollar is at $1.0849, slightly down from $1.0857.
Asian markets ended mostly lower on Wednesday as the U.S. dollar and bond yields rose following hawkish Fed remarks and subpar demand in two-year and five-year note auctions.Geopolitical tensions have impacted the markets following an attack on a Greek ship in the Red Sea by the pro-Iranian Yemeni Houthi group.
Chinese stocks experienced fluctuations before closing positively. The benchmark Shanghai Composite Index edged up slightly to 3,111.02, buoyed by the easing of home down payment and mortgage requirements in major cities and an improved economic outlook forecast by the International Monetary Fund.
In Hong Kong, the Hang Seng Index fell by 1.8% to 18,477.01. This decline follows a recent rally that had increased the index by more than 20% since late January.
Lenovo shares dropped 1.7% after the personal computer maker announced plans to sell $2 billion worth of zero-coupon convertible bonds to Saudi Arabia's sovereign wealth fund.
Japanese markets also faced downturns as rising government bond yields put pressure on growth stocks. The Nikkei 225 Index declined by 0.8% to 38,556.87, while the broader Topix Index decreased by 1.0% to 2,741.62. Tokyo Electric Power Holdings led the losses with an 8.3% drop, Mitsubishi Electric fell 4.6%, but Sompo Holdings saw a 4.2% increase.
In Seoul, the Kospi Index closed 1.7% lower at 2,677.30, with LG Chem and SK Innovation declining by 5.2% and 2.8%, respectively.
Australian markets closed lower after data revealed an unexpected rise in consumer price inflation to a five-month high in April, sparking concerns that the Reserve Bank might increase rates. The S&P ASX 200 Index fell by 1.3% to 7,665.60, and the All Ordinaries Index dropped by 1.2% to 7,935.70.
New Zealand’s S&P NZX-50 Index closed slightly lower at 11,678.68.
**Europe**
European stocks mostly declined on Wednesday as increased bond yields and a surge in oil prices due to heightened Middle Eastern tensions raised concerns about prolonged high interest rates.
In economic news, Germany is expected to see an improvement in consumer confidence in June, driven by rising economic and income expectations amid slowing inflation and increasing wages, according to a survey. The consumer confidence index rose to -20.9 in June from a revised -24.0 in May, the GfK and Nuremberg Institute for Market Decisions survey revealed. This marked the fourth consecutive improvement in overall consumer climate.
French consumer confidence remained steady in May, well below the long-term average as reported by the statistical office INSEE. The consumer sentiment index was unchanged at 90.0, contrary to economists' expectations of a rise to 91.
The French CAC 40 Index fell by 1.3%, the German DAX Index decreased by 1.0%, and the UK's FTSE 100 Index dropped by 0.4%.
BP Plc and Shell shares advanced on expectations that major oil producers will maintain output cuts at an upcoming meeting. BHP Group shares also rose following reports urging competitor Anglo American to extend the deadline for a proposed £39 billion merger.
Royal Mail's parent company, International Distributions Services, surged after accepting a takeover offer from Czech billionaire Daniel Kretinsky's EP Group.
**U.S. Economic Reports**
The Treasury Department is set to announce the results of this month's auction of $44 billion in seven-year notes at 1 PM ET. At 1:45 PM ET, New York Federal Reserve President John Williams will participate in a roundtable discussion with local leaders on business conditions and municipal and community services.
The Federal Reserve will release its Beige Book at 2 PM ET, providing anecdotal evidence on economic conditions across the twelve Fed districts. At 7 PM ET, Atlanta Federal Reserve President Raphael Bostic will partake in a conversation on the "Economic Outlook and Leadership" at the American Economic Association Conference on Teaching and Research in Economic Education.
**Stocks In Focus**
Marathon Oil (MRO) shares are surging in pre-market trading after ConocoPhillips (COP) agreed to acquire the energy company in an all-stock transaction valued at $22.5 billion, including $5.4 billion in debt.
Dick's Sporting Goods (DKS) is also seeing significant pre-market gains after reporting better-than-expected fiscal first-quarter results and raising its full-year guidance.
Conversely, American Airlines (AAL) shares are likely to face pressure after the airline lowered its second-quarter earnings guidance.
Restaurant chain Cava (CAVA) shares are also experiencing pre-market activity despite reporting fiscal first-quarter results that exceeded analysts' estimates on both revenue and profit.
