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The Wednesday Market Minute

  • Global stocks mixed as data shows moderating growth linked to Delta variant spread as well as labor and raw materials shortages in key markets.
  • Germany’s closely-watched investor sentiment index falls notably in July, while data from the U.S. Tuesday notched sharp dip in service sector activity.
  • Benchmark 10-year Treasury note yields tumble to 1.343% ahead of minutes from the Fed’s June meeting, with a focus on FOMC appetite for near-term tapering.
  • Samsung forecasts its strongest second quarter profit in 3 years as chip shipments offset a slump in handset sales.
  • CDC data shows 157.6 million Americans have now been fully vaccinated against the coronavirus, with around 331.2 million doses administered as of Tuesday.
  • U.S. equity futures suggest a firmer open on Wall Street ahead of JOLTs job openings data at 10:00 am Eastern time and Fed minutes at 2:00 PM Eastern time.

Wall Street futures traded higher Wednesday, with tech stocks set for another all-time peak, as investors prepped for the release of minutes from the last Federal Reserve rate meeting that could shed light on the central bank’s near-term outlook for growth and inflation.

Risk markets took a hit Tuesday after data from the Institute for Supply Management showed a sharp downtick in service sector activity in June — the economy’s biggest growth driver — last month, sparking a rally in Treasury bonds that pulled benchmark 10-year note yields to 1.343% in overnight trading. 

With the Atlanta Fed’s GDPNow forecasting tool showing a moderating rate of growth, and data from Europe suggesting raw materials and labor market shortages crimping industrial activity, investors are re-thinking the spring rotation into value stocks and using the pullback in Treasury yields to add tech names to their portfolios. 

The release of minutes from the Fed’s June rate-setting meeting at 2:00 PM Eastern time could add momentum to that trade, particularly if FOMC members appear happy to delay tapering the pace of bond market purchases as the economy works it way through a summer of shortages.

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In the meantime, futures contracts tied to the Dow Jones Industrial Average suggest a 35 point opening bell gain for the 30-stock index, while those linked to the S&P 500 are priced for a 7 point bump.

Futures tied to the Nasdaq, which closed a record high 14,663.64 points last night, are priced for a 75 point advance at the start of trading, fueled in part by a pre-market gain of 0.59% for Apple Inc.  (AAPL) – Get Report and a 0.52% move to the upside for Microsoft  (MSFT) – Get Report.

Apple’s pre-market gains could be linked to Samsung Electronics, its main global rival, which forecast a 53% surge in June quarter earnings earlier this morning, its biggest gain since 2018. 

Oil pushed higher again Wednesday, however, following yesterday’s respite, as traders continued to price in the impact of this week’s collapsed OPEC talks and the ongoing decline in domestic crude stocks, which have fallen to March 2020 lows.

WTI futures for August delivery were marked $1.05 higher from Tuesday’s closing levels in New York to trade at $74.42 per barrel, while Brent contracts for September, the global benchmark, added 97 cents to trade at $75.50 per barrel.

In overseas markets, European stocks bounced back into the green Wednesday, helped by a jump in commodity and tech stocks, with the Stoxx 600 rising 0.58% in early Frankfurt trading.

Overnight in Asia, Japan’s Nikkei 225 slumped 0.96% to close at 28,366.95 points as chip stocks tumbled amid growth concerns linked to the rapid surge in Delta variant coronavirus infections around the Asia region. 

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