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U.S equity futures extended declines Wednesday, following on from the first monthly decline for the S&P 500 since last autumn, as investors braced for a hawkish statement from the Federal Reserve amid yet another repricing of interest rate forecasts for the world’s biggest economy.
Stocks tumbled across the board on April 30, dragging the S&P 500 80.5 points, or 1.57%, lower on the session for its biggest single-day decline since late January as investors parsed data showing a big jump in first quarter employment costs and navigated declines in each of the so-called Magnificent 7 megacap tech stocks.
Treasury yields, meanwhile, powered higher, lifting benchmark 2-year notes firmly north of 5% following the employment-cost index data, which further pared bets that the Fed would cut rates between now and the end of the year.
Investors will be laser-focused on Fed Chairman Jerome Powell’s messaging when he speaks to the media later today in Washington, where he is likely to reiterate the central bank’s “higher for longer” stance on interest rates.
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No change in the Fed’s benchmark lending rate, which currently sits between 5.25% and 5.5%, is expected from the Fed’s two-day policy meeting, and markets are now pricing in only one rate reduction between now and the end of the year.
Wall Street also faces another busy session of earnings and data releases as well, with updates from Pfizer (PFE) , Mastercard (MA) , CVS Health (CVS) and Estee Lauder (EL) slated prior to the opening bell.
CVS Health slumped 12.2% after it slashed its full-year revenue forecast following weaker-than-expected earnings tied to soaring costs in its health insurance division.
Markets will be laser-focused on Fed Chairman Jerome Powell’s statement to the media at 2:30 pm Eastern time.
The Labor Department’s March Job Openings and Labor Turnover report, better-known as Jolts, is also slated for later in the morning, just after ADP’s National Employment report at 8:15 a.m. Eastern time.
Futures contracts tied to the S&P 500, which ended April with a 4.16% decline, are priced for a 17 point opening bell decline while those linked to the Dow Jones Industrial Average suggest a 75 point pullback.
The tech-focused Nasdaq, which slumped 2.2% on Tuesday to extend its April decline to 4.41%, is called 90 points lower.
Starbucks (SBUX) shares are a notable early mover, plunging more than 13% after the world’s biggest coffee chain slashed its full-year-sales forecast following softer first-quarter sales in both the U.S. and China.
Advanced Micro Devices (AMD) was also deep in the red, falling 6% after topping Wall Street’s first-quarter earnings estimates but estimating full-year chip sales of around $4 billion, a modest $500 million increase from its prior forecast.
On the upside, Amazon (AMZN) shares rose 2% after the tech and online-retail giant posted stronger-than-expected first-quarter earnings, including more than $25 billion in revenue from Amazon Web Services. The gains were tempered, however, by a muted near-term sales forecast and a warning that capital spending would increase throughout the year.
More Wall Street Analysts:
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In overseas markets, Europe’s Stoxx 600 was marked 0.77% lower in midday Frankfurt trading. Britain’s FTSE 100 edged 0.08% higher thanks in part to a weaker pound, which slipped to 1.2482 against the U.S. dollar.
Overnight in Asia, Japan’s Nikkei 225 closed 0.34% lower in Tokyo, while the regionwide MSCI ex-Japan index was marked 0.29% into the final hours of trading.
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