(July 1): US stocks declined before the opening bell on Wednesday as traders awaited unscripted commentary from Federal Reserve Chairman Kevin Warsh and fresh economic data.
Contracts for the S&P 500 Index fell 0.2% at 9:03am in New York, putting the benchmark on track to start the third quarter in the red and snap two straight sessions of gains. Meanwhile, Nasdaq 100 Index futures dropped 0.7%.
Warsh will be making his first public appearance abroad since becoming chairman of the Fed, at the European Central Bank’s forum in Sintra, Portugal. The appearance comes as market watchers argue over whether Warsh is a hawk or a dove. Traders will be looking for clues on the interest-rate path ahead.
“Given the inflationary pressures at play, including in so-called ‘core’ services, and the tightening stance adopted by the Fed under the chairmanship of Kevin Warsh, we believe the Fed is likely to raise its key interest rates by 25bp to 3.75-4% in July, and keep them within this range until 2027,” Benoit Rodriguez, head of economic research at CIC, wrote in a note to clients.
Also coming on Wednesday is a series of manufacturing data, with the Institute for Supply Management’s manufacturing purchasing managers index and construction spending. Vehicle sales will also be reported.
Iran latest
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US negotiators Steve Witkoff and Jared Kushner held positive discussions in Qatar and progress is being made on technical talks with Iran, according to a senior administration official, as the countries seek to turn an interim peace deal into a permanent end to the war.
Working groups have been formed by Tehran to discuss the implementation of the current agreement and negotiate a final peace deal, though no talks have taken place yet, the state-run Islamic Republic News Agency reported, citing Deputy Foreign Minister Kazem Gharibabadi.
“We are on the optimistic front on geopolitics,” said Mohit Kumar of Jefferies. “It is not that we feel that we will have a comprehensive deal. It’s likely to be more of a fudge. But as long as the Strait remains open and oil keeps flowing, market is likely to get de-sensitised around geopolitics.”
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Among premarket moves, Nike Inc fell 1.1% after executives at the sneaker maker gave a cautious outlook and warned about elevated consumer anxiety. Caterpillar Inc slipped after Michael Burry said in a Substack post that he shorted the stock for the first time.
Klarna Group Plc rose 11% after Alphabet Inc’s Google was ordered to pay almost US$2 billion ($2.6 billion) to the firm’s Pricerunner unit. General Mills Inc advanced 4.3% after the packaged-food company reported adjusted earnings per share for the fourth-quarter that beat estimates.
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