Futures inch lower on Fed policy caution, China data hits sentiment

Reuters

Published Jun 07, 2023 20:21

Updated Jun 07, 2023 20:52

(Reuters) - U.S. stock index futures edged lower on Wednesday as investors remained cautious ahead of inflation data and the Federal Reserve's policy meeting next week, while worse-than-expected China exports data for May hit sentiment.

Wall Street's main indexes ended higher on Tuesday, with S&P 500 up almost 20% from its October 2022 lows, underpinned by rising expectations that the Fed will hold interest rates steady at its policy meeting on June 13-14.

U.S. shares have also been boosted by a rally in megacap stocks and a stronger-than-expected earnings season. However, some analysts say that profit-taking may be round the corner for big tech and other major growth stocks.

"Nasdaq is more than 40% up from its October lows, not posting a decent correction since mid-March. Therefore, the risks of a corrective setback seem to be increasing, especially with a potential liquidity squeeze from Treasury issuance looming," said Charalampos Pissouros, senior investment analyst at XM.

Inflation data in the U.S. is expected to show consumer prices cooled slightly on a month-over-month basis in May but core prices are likely to have remained elevated, and the Fed is widely expected to hold interest rates.

Money market participants see a 75% chance that the U.S. central bank will skip raising interest rate in the June meeting but will hike in July, according to the CME's Fedwatch tool.

Two-year Treasury note yield that best reflects interest rate expectations slipped by 2 basis points (bps), the same as the drop in yield on 10-year bonds. [US/]

China's May exports slumped 7.5% year-on-year, much larger than the forecast 0.4% fall and the biggest decline since January, raising concerns over global demand.

At 5:37 a.m. ET, Dow e-minis were down 43 points, or 0.13%, S&P 500 e-minis were down 3.5 points, or 0.08%, and Nasdaq 100 e-minis were down 23.25 points, or 0.16%.

Among individual stocks, Netflix (NASDAQ:NFLX) climbed 2.2% in premarket trading after Wells Fargo (NYSE:WFC) raised the stock's target price to $500 from $400 per share, the highest on Wall Street, according to Refinitiv.

Coinbase (NASDAQ:COIN) shares rose 3.9% after hitting a seven-month low on Tuesday as the Securities and Exchange Commission sued the largest U.S. crypto exchange, accusing it of operating illegally, without having first registered with regulator.