U.S. stock futures wobbled ahead of minutes from the Federal Reserve that will be scrutinized for insights into the state of the economy and the central bank’s efforts to tame inflation through interest-rate increases.
Futures tied to the S&P 500 oscillated between small gains and losses, pointing to the broad-market index hovering after a tepid two-day rally. The S&P 500 notched a 0.2% gain on Tuesday. Nasdaq-100 futures ticked down 0.1%, pointing to muted moves for technology stocks after the opening bell. Dow Jones Industrial Average futures lost 0.2%.
Both VIX and VIXmain rose nearly 1%; Gold slid 0.23 and reached $1759.8.
Stocks have edged up in recent days, as some investors shifted their views about the aggressiveness of central bank tightening as economic growth and consumer sentiment weakened. Markets are beginning to price in a pivot on policy from the Federal Reserve, despite inflation still being at a more than four-decade high. The S&P 500 is still in a bear market and closed down 20.1% from its latest peak on Tuesday.
“Over the last couple of days, markets priced out some of the hawkishness that they were expecting for the Fed. What’s going to be interesting is to see whether the Fed in the short term will try to push back,” said Gergely Majoros, a portfolio adviser at Carmignac. “At least for the foreseeable future, it’s all about inflation.”
The Federal Reserve is expected to release minutes from its last policy meeting at 2 p.m. ET. Investors were also awaiting data on the services sector, with purchasing managers’ surveys due at 10 a.m. ET.
“We are awaiting some kind of short-term rebound because the movement has been extremely quick from a historical point of view,” said Francesco Sandrini, head of multiasset strategies at Amundi. “The hope is that central banks, to some extent, are stopping hiking rates and entering into a wait-and-see approach” to assess how much economic growth and corporate earnings are being affected, he said.
A well-known recession indicator flashed in the bond market again, as the U.S. yield curve inverted. That happens when shorter-dated yields such as for the two-year bond are higher than for longer-dated debt such as the 10-year.
The two-year yield was at 2.843% on Wednesday compared to 2.814% for the 10-year, according to Tradeweb. Prices fall when yields rise.
Oil prices recovered after their biggest plunge since March on Tuesday. Global benchmark Brent crude rose 1.3% to trade at $104.05 a barrel. The U.S. equivalent WTI rose 0.7% after falling below $100 a barrel the day before for the first time in about two months.
“When the growth outlook changes, people tend to anticipate that the demand side for energy will weaken as well and that tends to put pressure on the price of oil,” Mr. Majoros said.
Overseas, the pan-continental Stoxx Europe 600 rose 1.2%. The Norwegian government intervened to end an oil workers strike on Tuesday evening that threatened to more than halve the country’s gas exports, a key source of energy for the region. A benchmark natural-gas futures contract fell 6% after reaching a four-month high the previous day.
Dutch food delivery firm Just Eat Takeaway surged 18% after its subsidiary Grubhub struck a deal with Amazon.com to be added to Prime services in the U.S. The e-commerce giant also has the option to take a small equity stake. In premarket trading in New York, Grubhub competitor DoorDash fell 5%.
Cryptocurrency exchange Coinbase Global declined 3% after a rival exchange put forward a proposal to regulator that would allow crypto investors to bypass brokers while trading derivatives. Instability in the digital-assets ecosystem was also on display after brokerVoyager Digital Ltd. said that it has filed for bankruptcy protection, days after it suspended withdrawals and trading on its platform.
The British pound hovered close to its lowest level since March 2020 after the country’s finance and health ministers resigned on Tuesday evening.
In Asia, most major benchmarks declined. The Shanghai Composite Index fell 1.4%and Hong Kong’s Hang Seng Index lost 1.2%. Japan’s Nikkei 225 also retreated 1.2%.