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Oleksandr Pylypenko

Stock Index Futures Slip as Fed Rate Decision Looms, U.S. Jobs Data on Tap

June S&P 500 E-Mini futures (ESM24) are down -0.29%, and June Nasdaq 100 E-Mini futures (NQM24) are down -0.58% this morning as the prospect of higher-for-longer U.S. interest rates continued to weigh on sentiment, with all eyes on the Federal Reserve’s interest rate decision due later in the day.

In yesterday’s trading session, Wall Street’s major indices ended lower. GE Healthcare (GEHC) slumped over -14% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the medical equipment firm reported weaker-than-expected Q1 results. Also, F5 Inc. (FFIV) slid more than -9% after the application security company posted mixed Q2 results and offered a disappointing Q3 outlook. In addition, Warner Bros Discovery (WBD) fell over -9% following a report from the Wall Street Journal indicating that Comcast is seeking to replace Warner Bros as one of the broadcast partners for the National Basketball Association. On the bullish side, Eli Lilly (LLY) climbed nearly +6% after the pharmaceutical giant reported better-than-expected Q1 earnings and raised its full-year guidance. Also, 3M Company (MMM) advanced over +4% and was the top percentage gainer on the Dow after the industrial conglomerate reported upbeat Q1 results and said it expects to pay a dividend of approximately 40% of its adjusted free cash flow.  

Economic data on Tuesday showed that the U.S. CB consumer confidence index fell to a 1-3/4 year low of 97.0 in April, weaker than expectations of 104.0. Also, the U.S. employment cost index rose +1.2% q/q in the first quarter, stronger than expectations of +1.0% q/q. In addition, the U.S. April Chicago PMI unexpectedly fell to 37.9, weaker than expectations of 44.9. Finally, the U.S. S&P/CS HPI Composite - 20 n.s.a. rose +7.3% y/y in February, stronger than expectations of +6.7% y/y.

“With inflation data continuing to be surprisingly hot for the past quarter, the narrative that these surprises are all attributable to ‘one-offs’ in individual components is becoming harder to sustain. Time will tell, but the data suggest that what we call a ‘deferred landing’ is more likely than the long-anticipated ‘soft landing’,” said Joe Davis at Vanguard.

Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. U.S. rate futures have priced in a 99.3% probability for the Fed to keep its federal funds rate unchanged at the range of 5.25%-5.50%, the highest level in more than two decades. Market participants anticipate Fed Chair Jerome Powell to adopt a hawkish tone in his press conference, likely noting that the central bank is not in a hurry to cut interest rates, considering persistent inflation and a still-strong labor market.

Meanwhile, a survey conducted by 22V Research revealed that only 16% of polled investors anticipate a “risk-on” reaction to the Fed’s rate decision, while 44% indicated “risk-off,” and 40% chose “negligible/mixed.”

On the earnings front, notable companies like Mastercard (MA), CVS Health (CVS), Qualcomm (QCOM), Pfizer (PFE), Kraft Heinz (KHC), Marriott International (MAR), DoorDash (DASH), eBay (EBAY), and DuPont (DD) are slated to release their quarterly results today. 

On the economic data front, all eyes are focused on the U.S. ADP Nonfarm Employment Change data in a couple of hours. Economists, on average, forecast that the April ADP Nonfarm Employment Change will stand at 179K, compared to the previous number of 184K.

Also, investors will likely focus on the U.S. JOLTs Job Openings data, which came in at 8.756M in February. Economists foresee the March figure to be 8.680M.

U.S. Construction Spending data will be reported today. Economists foresee this figure to stand at +0.3% m/m in March, compared to the previous number of -0.3% m/m.

The U.S. ISM Manufacturing PMI will also be closely watched today. Economists expect the April figure to be 50.0, compared to March’s value of 50.3.

The U.S. S&P Global Manufacturing PMI will come in today. Economists foresee that the S&P Global Manufacturing PMI will come in at 49.9 in April, compared to 51.9 in March.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -2.300M, compared to last week’s value of -6.368M.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.685%, down -0.04%.

Major European bourses are closed today for the Labor Day holiday.

Japan’s Nikkei 225 Stock Index (NIK) closed down -0.34%, while Chinese markets were closed for a holiday.

China’s Shanghai Composite Index was closed for the Labor Day holiday. Mainland China’s financial markets will reopen on Monday, May 6th. 

Japan’s Nikkei 225 Stock Index closed slightly lower today as investors cautiously awaited the U.S. Federal Reserve’s policy decision. Brokerage and shipping stocks led the declines on Wednesday. S&P Global reported on Wednesday that the headline au Jibun Bank Japan manufacturing purchasing managers’ index was revised lower in April, though it still marked the softest decline since last August. Meanwhile, the Japanese yen was steady on Wednesday. The Sankei newspaper reported on Tuesday that Japan might introduce measures to offer tax incentives for companies converting foreign profits into the yen and include it in the government’s annual mid-year policy blueprint compiled in the summer. As per the newspaper’s report, the tax holiday could be deployed as a policy instrument to stem the yen’s depreciation, encouraging companies to return overseas assets to Japan. In corporate news, Lasertec Corporation surged over +14% after the semiconductor equipment maker reported better-than-expected Q3 earnings and strong order growth. Also, Tamron climbed more than +9% after the company reported higher Q1 attributable profit and net sales and raised its targets for the fiscal first half. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.93% to 20.66. 

The Japanese April au Jibun Bank Japan Manufacturing PMI arrived at 49.6, weaker than expectations of 49.9.

Pre-Market U.S. Stock Movers

Amazon (AMZN) rose over +1% in pre-market trading as better-than-expected Q1 results, including a beat on the company’s Amazon Web Services segment, overshadowed below-consensus Q2 sales guidance.

Advanced Micro Devices (AMD) slumped more than -5% in pre-market trading after the semiconductor firm provided softer-than-expected Q2 revenue guidance. The company also gave a disappointing revenue forecast for artificial intelligence processors, estimating that its MI300 lineup will generate approximately $4 billion in revenue for the year.

Starbucks (SBUX) plunged over -12% in pre-market trading after reporting weaker-than-expected Q2 global comparable store sales and cutting its full-year guidance.

Pinterest (PINS) surged more than +17% in pre-market trading after the social media company posted upbeat Q1 results and issued above-consensus Q2 revenue guidance.

DigitalOcean Holdings (DOCN) climbed over +8% in pre-market trading after S&P Dow Jones Indices announced Tuesday that the company would replace Agiliti in the S&P SmallCap 600 on May 7th.

Dollar Tree (DLTR) gained about +1% in pre-market trading after KeyBanc upgraded the stock to Overweight from Sector Weight with a $150 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - May 1st

Mastercard (MA), Qualcomm (QCOM), Pfizer (PFE), Automatic Data Processing (ADP), CVS Health Corp (CVS), KKR & Co (KKR), Marriott (MAR), DoorDash (DASH), Estee Lauder (EL), MetLife (MET), AIG (AIG), Aflac (AFL), Cencora Inc (COR), Kraft Heinz (KHC), Allstate (ALL), Johnson Controls (JCI), IDEXX Labs (IDXX), Yum! Brands (YUM), Cenovus Energy Inc (CVE), Corteva (CTVA), Devon Energy (DVN), CDW Corp (CDW), Monolithic (MPWR), Global Payments (GPN), Verisk (VRSK), DuPont De Nemours (DD), VICI Properties (VICI), Barrick Gold (GOLD), ANSYS (ANSS), Garmin (GRMN), eBay (EBAY), WEC Energy (WEC), American Water Works (AWK), CGI Inc (GIB), Franco-Nevada (FNV), PTC (PTC), Entegris (ENTG), PPL (PPL), Fortis Inc (FTS), First Solar (FSLR), Westlake Chemical (WLK), Ventas (VTR), Marathon Oil (MRO), Mid-America Apartment (MAA), CF Industries (CF), Albemarle (ALB), Neurocrine (NBIX), Host Hotels Resorts (HST), MGM (MGM), Ares Capital (ARCC), Brookfield Infrastructure Partners (BIP), Flex (FLEX), Gfl Environmental (GFL), Sarepta (SRPT), APA Corp (APA), Qorvo Inc (QRVO), Wingstop Inc (WING), United Therapeutics (UTHR), Paycom Soft (PAYC), American Financial (AFG), Tetra Tech (TTEK), Clean Harbors (CLH), Zillow (Z), Procore Technologies (PCOR), Mosaic (MOS), Bio-Techne (TECH), Curtiss-Wright (CW), Informatica (INFA), Dayforce (DAY), Carvana (CVNA), Repligen (RGEN), Murphy USA Inc (MUSA), Pilgrims Pride (PPC), Parsons (PSN), Generac (GNRC), CH Robinson (CHRW), Norwegian Cruise Line (NCLH), Etsy Inc (ETSY), Siteone Landscape Supply (SITE), Axalta Coating Systems (AXTA), Jazz Pharma (JAZZ), OGE Energy (OGE), Summit Materials Inc (SUM), Acadia Healthcare (ACHC), Sprouts Farmers (SFM), ESAB Corp (ESAB), Ryman Hospitality Properties (RHP), Selective (SIGI), Gildan Activewear (GIL), MGIC Investment (MTG), Freshworks (FRSH), UGI (UGI), Tenable (TENB), Axis Capital (AXS), Silgans (SLGN), Glaukos Corp (GKOS), Euronet (EEFT), Enact Holdings (ACT), The Hanover Insurance (THG), Gates Industrial Corp (GTES), Radian (RDN), Rayonier (RYN), Avnet (AVT), Carpenter Technology (CRS), Valmont Industries (VMI), Cactus (WHD), Insperity (NSP), Scotts Miracle-Gro (SMG), Kemper (KMPR), Warrior Met Coal (HCC), Advanced Energy (AEIS), Spire (SR), FormFactor (FORM), Wolfspeed (WOLF), Remitly Global (RELY), Axcelis (ACLS), Envista Holdings (NVST), Avis (CAR), Q2 Holdings (QTWO), EPR Properties (EPR), Comstock Resources (CRK), Steven Madden (SHOO).

More Stock Market News from Barchart

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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