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Dow futures largely flat; caution ahead of inflation and FOMC meeting

Published 06/11/2023, 07:20 PM
Updated 06/12/2023, 07:11 AM
© Reuters.
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Investing.com -- U.S. stock futures edged largely higher early Monday, continuing the previous week’s positive tone as market participants awaited the Federal Reserve's latest interest rate decision and fresh inflation data for guidance.

By 06:50 ET (10:50 GMT), the Dow futures contract was largely flat, S&P 500 futures traded 8 points, or 0.2% higher, and Nasdaq 100 futures climbed 66 points, or 0.5%.

The main Wall Street indices closed higher Friday, all recording positive weeks, with the broad-based S&P 500 index registering its fourth straight positive week for the first time since last August.

Fed decision looms large

There’s little in the way of economic data or major earnings to digest Monday, and so investors are focusing upon the Federal Reserve’s latest interest rate decision, due on Wednesday, with investors widely betting that the U.S. central bank will push pause on a long-running policy tightening cycle.

According to Investing.com's Fed Rate Monitor Tool, there is a more than 79% chance that the rate-setting Federal Open Market Committee will vote to keep borrowing costs steady.

CPI could change views

That said, there is still an outside chance that the bank could decide to lift rates yet again, particularly if Tuesday’s May consumer price index surprises on the upside.

Economists predict that the reading will rise by 4.1% on an annual basis, cooling from the prior level of 4.9% in April.

Other data slated for release this week include PPI, retail sales, Philadelphia Fed index, as well as Michigan consumer sentiment and expectations.

Speeches from Fed officials James Bullard and Christopher Waller will also be closely monitored.

Nasdaq to buy financial software firm Adenza - WSJ

In corporate news, the Wall Street Journal reported that Nasdaq (NASDAQ:NDAQ) is set to buy financial software firm Adenza for $10.5 billion in a cash and stock deal.

Illumina (NASDAQ:ILMN) will also be in the spotlight after CEO Francis deSouza stepped down on Sunday, marking a victory for activist investor Carl Icahn and heightening expectations that the biotech could unwind its controversial $7.1 billion acquisition of Grail.

In Europe, UBS (SIX:UBSG) announced earlier Monday that it had completed its takeover of troubled rival Credit Suisse (SIX:CSGN), creating a giant Swiss bank with a balance sheet of $1.6 trillion.

Goldman cuts oil price estimate

Oil prices retreated Monday after influential investment bank Goldman Sachs cut its price estimate for Brent crude to $86 a barrel, down from the previous estimate of $95 per barrel by the end of 2023, adding to two previous reductions to its forecast in the past six months.

The move comes after a series of weak data points out of China, the world's biggest oil importer, including producer prices falling at their fastest clip in seven years last month.

Traders have also been digesting conflicting reports regarding the potential of an interim nuclear deal between Tehran and Washington that could see Iranian crude return to the global market.

“We confirm no such thing as negotiations for an interim agreement or new arrangements to replace the nuclear deal,” Iranian foreign ministry spokesman Nasser Kanaani said in a press conference in Tehran on Monday.

By 06:50 ET, U.S. crude futures traded 2.3% lower at $68.58 a barrel, while the Brent contract dropped 2% to $73.28.

Additionally, gold futures rose 0.1% to $1,979.75/oz, while EUR/USD traded 0.2% higher at 1.0772.

(Oliver Gray contributed to this item.)

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