MN: Wall Street eyes strong open as investors await Fed minutes
U.S. stock futures were higher on Wednesday, building on gains from the previous two sessions, investors digested economic data and waited for the release of Federal Reserve minutes that could fuel hopes of a pause to rate hikes.
Market reaction to weaker-than-expected housing starts data and firmer inflation numbers from wholesalers was muted.
Futures for the Dow Jones Industrial Average climbed 158 points, or 1%, to 16,285, while those for the S&P 500 index gained 18 points, or 1%, to 1,907. Futures for the Nasdaq-100 index advanced 48 points, or 1.2%, to 4,141.
Fed in focus: The upbeat mood came as investors shook off a mostly down session in Asia (http://www.marketwatch.com/story/asian-markets-take-wait-and-see-attitude-toward-oil-freeze-2016-02-16) and instead looked ahead to a raft of economic data and the insight into the Fed's assessment of the U.S. economy.
Minutes from the central bank's Jan. 26-27 meeting are due at 2 p.m. Eastern Time. Last week, Fed Chairwoman Janet Yellen acknowledged in testimony to Congress that concerns about the global economy could cloud the U.S. economic outlook and may slow the pace of future rate hikes.
"However, since the meeting, uncertainty in financial markets and the risk of a systemic crisis have both increased which, in our view, should keep the Fed on hold until the September meeting," they added.
Read:Why economists increasingly think the Fed's hands are tied (http://www.marketwatch.com/story/why-economists-increasingly-think-the-feds-hands-are-tied-2016-02-12)
Investors are "predicting an increasingly dovish tone from the Fed", which should put the dollar under further selling pressure, said Mike McCudden, head of derivatives at stockbroker Interactive Investor. The ICE dollar index was slightly higher at 96.992 (http://www.marketwatch.com/story/dollar-weakens-against-yen-rivals-as-investors-turn-skeptical-about-oil-deal-2016-02-17) ahead of the market open.
Boston Fed President Eric Rosengren said on Tuesday (http://www.marketwatch.com/story/fed-can-be-unhurried-to-raise-interest-rates-rosengren-2016-02-16) the central bank is in no rush to raise rates if the global financial and economic headwinds persist.
After the market closes, St. Louis Fed President James Bullard gives a speech on the U.S. economic and monetary policy outlooks to the CFA Society in St. Louis.
Economic data: Before the Fed minutes are out, investors are faced with a deluge of economic data. The cost of producing goods and services (http://www.marketwatch.com/story/producer-price-index-rises-01-defying-expectations-for-another-decline-2016-02-17)rose 0.1% in January, the Labor Department said Wednesday, beating expectations of a 0.2% decline. Meanwhile, housing starts fell (http://www.marketwatch.com/story/housing-starts-dip-38-in-january-to-annual-11-million-rate-below-forecasts-2016-02-17) 3.8% in January to a seasonally adjusted annual rate of 1.1 million, missing economists' forecasts.
At 9:15 a.m. Eastern, industrial production and capacity utilization for last month will be released, both forecast to show an improvement over December.
Oil roller-coaster ride: Oil prices were the center of attention on Tuesday after Saudi Arabia, Russia, Venezuela and Qatar agreed to freeze production at January levels. However, the market--hoping for an output cut--was disappointed and oil prices ended Tuesday sharply lower.
Read: 5 key reasons oil is sinking after oil-output freeze (http://www.marketwatch.com/story/5-key-points-to-know-about-the-oil-output-freeze-2016-02-16)
The negative sentiment was shaken off on Wednesday, with crude oil rising 2.1% to $29.64 a barrel and Brent jumping 2.8% to $33.07 a barrel.
U.S. stock markets closed higher on Tuesday (http://www.marketwatch.com/story/dow-futures-rally-almost-200-points-as-investors-warm-to-risk-2016-02-16) on their return from the Presidents Day holiday, providing a rare day off the recent trend of trading in lockstep with oil prices.
Movers: Shares of Fossil Group Inc. (FOSL) rallied 14% ahead of the bell after the watch and jewelry maker late Tuesday reported better-than-expected results (http://www.marketwatch.com/story/fossil-group-reports-better-than-expected-results-2016-02-16-17485747).
Priceline Group Inc. (PCLN) jumped 10% after the company beat fourth-quarter earnings expectations (http://www.marketwatch.com/story/priceline-shares-climb-after-earnings-beat-2016-02-17).
Kinder Morgan Inc. (KMI) shares jumped 10% on news that Warren Buffett's Berkshire Hathaway bought a new stake in the company with 50,700 shares.
Terex Corp. (TEX) surged 10% after Zoomlion Heavy Industry Science and Technology Co. (000157.SZ) said it plans to buy the U.S. manufacturer of construction machinery products.
Alphabet Inc. (GOOGL)(GOOGL) inched 0.3% higher in thin trade after the Google parent announced Tuesday afternoon that its think tank, previously called Google Ideas, will become a technology incubator separate (http://www.marketwatch.com/story/google-think-tank-becomes-jigsaw-latest-independent-alphabet-company-2016-02-16) from the Google search company.
Other markets:European stocks marched higher (http://www.marketwatch.com/story/european-stocks-bounce-higher-with-an-assist-from-oil-shares-2016-02-17), getting a lift from the rally in oil and mostly higher metals prices.
Gold and silver, however, broke the positive trend among metals and headed lower as investors continued their move back to more riskier investments.
