Here are five things you must know for Wednesday, August 24:
1. -- Stock Futures Edge Higher With Fed Retreat In Focus
U.S. equity futures edged modestly higher Wednesday, while Treasury bond yields eased and the dollar held steady against its currency peers, as investors continue to fret over the prospects of a protracted global slowdown while closely tracking comments from Federal Reserve officials ahead of its annual retreat in Jackson Hole later this week.
Bets on another 75 basis point rate hike from the Fed, following two similar increases in June and July, are essentially sitting at 50%, according to the CME Group's FedWatch tool, as investors see easing inflation pressures and weakening growth slowing the central bank's policy path.
That view was supported yesterday by data showing a big decline in economic activity over the month of August, with S&P Global's flash composite purchasing managers index hitting the lowest levels since May of 2020, an a massive slump in new home sales, which fell the most in six-and-a-half years.
Minnesota Fed President Neel Kashkari, however, said late Tuesday that his biggest concern was that "if we are wrong and markets are wrong and inflation is much more embedded, at a much higher level, than we appreciate, then we are going to have to be more aggressive" in bringing it back down.
The hawkish outlook is keeping the U.S. dollar elevated against its global peers, with the dollar index rising 0.05% overnight to 108.677, although Treasury bond yields slipped lower following a solid $44 billion 2-year note auction yesterday.
Global growth prospects continue to dim, as well, amid an energy crisis in Europe that is being exacerbated by disruptions in natural gas supplies from Russia and China's ongoing struggle to apply its 'zero Covid' policies on the world's second largest economy without tipping it into contraction.
In overseas markets, Europe's Stoxx 600 was little-changed in early Frankfurt trading while overnight in Asia the region-wide MSCI fell 0.55% and Japan's Nikkei 225 ended 0.45% lower,
On Wall Street, futures tied to the S&P 500 are indicating a 4 point opening bell bump while those liked to the Dow Jones Industrial Average are priced for a 20 point bump. Futures linked to the tech-focused Nasdaq are indicating a 20 point advance.
2. -- Oil Prices March Higher Amid OPEC Production Cut Worries
Global oil prices marched higher Wednesday as traders worried that a warning from Saudi Arabia earlier this week could lead to OPEC production cuts when the cartel meets early next month in Vienna.
Saudi Arabia's influential Energy Minister, Prince Abdulaziz bin Salman, described global markets as "a self-perpetuating vicious circle of very thin liquidity and extreme volatility" during an interview with Bloomberg, indicating the Kingdom could be edging towards modest output cuts in order to offset the impact of new oil supplies from Iran.
Iran, which has had global sanctions on its crude exports in place since 2015, appears to be nearing a deal with U.S. and European officials over monitoring of its nuclear program. If an agreement is reached, it could add a further 2.6 million barrels a day into the market.
WTI futures for September delivery, which are tightly-linked to U.S. gas prices, were marked $1.35 higher at $95.09 per barrel. Brent crude contracts for October, the global pricing benchmark, rose $1.40 to $101.61 per gallon.
The moves, in part, triggered the first overnight rise in domestic U.S. diesel prices since mid-June, according to data from the American Automobile Association, with the national average up half a cent at $4.977 per gallon.
3. -- Twitter Shares Steady As Whistleblower Complaint Reaches Congress
Twitter (TWTR) shares edged modestly higher in pre-market trading following detailed revelations from a company whistleblower, provided to federal regulators, that outlined the social media group's security lapses.
Peiter Zatko, who once ran Twitter's security division, said the group made false claims about its online defenses and prioritized user growth over spam reduction in papers made available to Congress late Tuesday. Zatko, who is also know in the hacking community as "Mudge", first provided details of his allegations last month to the U.S. Securities and Exchange Commission, the Department of Justice and the Federal Trade Commission.
“These troubling disclosures paint the picture of a company that has consistently and repeatedly prioritized profits over the safety of its users and its responsibility to the public, as Twitter executives appeared to ignore or hinder efforts to address threats to user security and privacy,” said Connecticut Senator Richard Blumenthal.
The allegations could provide fuel for Elon Musk's pending case against the social media group, which he first planned to purchase for $44 billion. The Tesla CEO will face Twitter in court on October 17 in Delaware as he attempts to scupper the deal, largely on the basis of his own allegation that Twitter is hiding the number of so-called fake or 'bot" accounts on the platform.
Twitter shares, which fell 7.3% yesterday, were marked 0.5% higher in pre-market trading to indicate an opening bell price of $40.05 each.
4. -- Nordstrom Shares Dive After Cutting 2022 Profit Forecast
Nordstrom (JWN) shares plunged lower in pre-market trading after the struggling retailer slashed its full-year profit forecast following a mixed set of second quarter earnings
Nordstrom, which targets a higher-income consumer base than many of its department store rivals, said full-year sales will likely rise between 5% and 7% from 2021 levels, down from its prior forecast of an 8% growth rate. Adjusted profits, Nordstrom said, will likely range between $2.45 to $2.75 per share, well off its May estimate of between $3.38 and $3.68 per share.
For the three months ending in July, Nordstrom said sales rose 12% to $4.095 billion, just ahead of Street forecasts, with adjusted earnings of 81 cents per share.
"While our quarterly results were consistent with our previous outlook, customer traffic and demand decelerated significantly beginning in late June," said CEO Erik Nordstrom. "We are adjusting our plans and taking action to navigate this dynamic in the short term."
Nordstrom shares were marked 12.8% lower in pre-market trading to indicate an opening bell price of $20.24 each.
5. -- Nvidia Q2 Earnings In Focus As Gaming Sector Weakens
Nvidia (NVDA) shares edged lower in pre-market trading ahead of the chipmaker's closely-watched second quarter earnings after the closing bell.
Analysts expect the group to post earnings of $1.25 per share, a 20% jump from the same period last year, on revenues of around $6.7 billion, the bulk of which -- $3.81 billion -- is likely to come from its data center division.
Nvidia, which also makes chips for the gaming and cryptocurrency mining industries, cautioned earlier this month that video game sector weakness would likely bring a 44% decline in revenues for the division, with a second quarter tally of $2.04 billion.
“Our gaming product sell-through projections declined significantly as the quarter progressed,” CEO Jensen Huang told investors on August 8. “As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our Gaming partners to adjust channel prices and inventory.
Nvidia shares were marked 0.05% lower in pre-market trading to indicate an opening bell price of $171.79 each.
