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Dow futures edge higher; Fed minutes in the spotlight

Published 08/16/2023, 06:21 AM
Updated 08/16/2023, 06:43 AM
© Reuters -- U.S. stock futures edged higher Wednesday, rebounding after the previous session’s sharp losses ahead of the release of minutes from the last Federal Reserve as well as earnings from retail giant Target.

By 06:30 ET (10:30 GMT), the Dow futures contract was up 10 points, or 0.1%, S&P 500 futures traded 2 points, or 0.1% higher, and Nasdaq 100 futures climbed 23 points, or 0.2%.

The main equities indices all fell over 1% Tuesday after stronger-than-expected retail sales data increased worries interest rates could stay higher for longer, while U.S. big banks dropped on a report that Fitch could downgrade some lenders.

Fed minutes in focus

The Federal Reserve is widely expected to pause its rate-hiking cycle in September at its next policy meeting, but the strong retail sales growth indicated that U.S. consumers continue to be resilient, potentially adding to inflationary pressures further down the line.

The Fed's policy making panel will release the minutes of its July meeting later in the session, and this is likely to provide investors with more insight into officials' thinking on where interest rates should go for the rest of the year.

There is also more economic data to digest, including industrial and manufacturing production numbers for July as well as housing starts figures.

Target heads up retail earnings slate

In corporate news, the retail sector will remain in focus, with Target (NYSE:TGT) the highlight, as the big-box retailer is expected to post its first quarterly revenue decline in six years when it unveils its latest results Wednesday.

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Target, which relies heavily on expenditures on such discretionary items to fuel its business, has already warned that returns would be weaker during the April to June period.

There are earnings reports from a number of top retailers due this week, with Home Depot (NYSE:HD) reporting Tuesday a smaller-than-expected decline in quarterly same-store sales, as demand was buoyed by Americans spending on small-scale home-improvement projects.

Intel ends plans to buy Tower Semiconductor

Elsewhere, Intel (NASDAQ:INTC) announced earlier Wednesday it has terminated its plans to acquire Tower Semiconductor (NASDAQ:TSEM) as it was unable to get timely regulatory approvals, and will pay a termination fee of $353 million to the Israeli contract chipmaker.

Tesla (NASDAQ:TSLA) has cut prices for its existing inventories of its premium Model S and Model X cars in China, it said on Wednesday. This followed the announcement earlier this week that it plans to cut prices for its Model Y's long-range and performance versions, triggering concerns around its profit margins.

Crude steady after U.S. stockpiles draw

Oil prices stabilized Wednesday after early losses, as traders weighed concerns over China’s weakening economy against a bigger-than-expected draw in U.S. inventories.

Data from the American Petroleum Institute showed that U.S. oil stockpiles saw a much bigger-than-expected 6.2 million barrel draw last week, and official inventory data, from the Energy Information Administration, is due later for confirmation.

By 06:30 ET, the U.S. crude futures traded 0.1% lower at $80.97 a barrel, while the Brent contract dropped 0.1% to $84.86. Both benchmarks had weakened to their lowest since Aug. 8 on Tuesday.

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Additionally, gold futures rose 0.1% to $1,937.55/oz, while EUR/USD traded 0.2% higher at 1.0921.

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