MW: U.S. stocks: Futures flat pre-Fed minutes, Hertz tumbles
MADRID (MarketWatch) — U.S. stock futures moved to the flat line on Wednesday amid some concerns the rally could be running out of some steam, and as investors waited for the minutes of the latest Federal Open Market Committee meeting.
Shares of Apple Inc. were slightly higher in premarket after setting a closing record on Tuesday, while Lowe’s Cos. fell on results.
Futures for the Dow Jones Industrial Average DJU4, -0.12% fell 2 points to 16,879, while those for the S&P 500 index SPU4, -0.01% eased 0.5 point to 1,976.70. Futures for the Nasdaq-100 index NDU4, -0.06% rose 1 point to 4,035.25.
No economic events are on Wednesday’s calendar beyond the minutes of the July 29-30 FOMC meeting. Some of the language in the July policy statement was more hawkish, with the Fed dropping language describing the jobless rate as “elevated,” instead noting “a range of labor market indicators suggests that there remains significant under-utilization of labor resources.”
“The question which everyone will be asking is if the Fed are ready to increase the interest rate sooner rather than later. Some hawkish members have certainly started beating the drums of an early increase,” said Naeem Aslam, chief market analyst at Ava Trade.
Read: Morgan Stanley’s take on the Fed’s exit plan
While investors may glean clues about the Federal Reserve’s exit strategy from the minutes, markets may also quickly move past them to focus on Fed Chairwoman Janet Yellen’s speech on Friday morning (10 a.m. Eastern Time) in Jackson Hole, Wyo. Read: Yellen to stress patience on rates at Jackson Hole
U.S. stocks were buoyed on Tuesday by better-than-expected housing starts and a handful of upbeat earnings. The S&P 500 index SPX, +0.50% rose 0.5%, to close at 1,981.60, while the Dow industrials DJIA, +0.48% gained 0.5% to end at 16,919.59. The Nasdaq Composite COMP, +0.43% added 0.4% to finish at 4,527.51, scoring its highest close since March 31, 2000 for the second session in a row.
What strategists are saying: Wall Street has seen a boost in recent sessions due to a lack of upheaval on the geopolitical front, but this rally looks to be running out of steam, said Joao Monteiro, analyst at Valutrades, in a note to investors.
“This is perhaps no real surprise — markets are now nudging back into that inflated territory and there is still the risk of one or more of the conflict hot-spots escalating significantly, although the risk-on trade remains in favor — we have USD/JPY USDJPY, +0.40% back above ¥103 and gold GCZ4, -0.01% resolutely below $1,300/oz,” he said.
If the Fed minutes show another bias, Monteiro said equities “could well find an excuse to move higher once again.”
Investors should keep buying the dips in this market, because it’s just showing signs of a maturing bull phase, rather than “warning of an impending market turnaround,” said strategists at Citigroup in a recent note. Among the five measures they look at, stock-return volatility across sectors remains stubbornly low and doesn’t suggest a narrowing of the market, say the Citi analysts.
