Market Watch:-Dow futures contract fell 35 points, S&P 500 futures dropped 12 points, and Nasdaq 100 futures fell 80 points.
The US Federal Reserve’s policy-setting meeting concludes, Amazon’s Q1 results are positive, crude prices are affected by US inventories, and Wall Street begins the new month negatively.
Federal Reserve’s policy meeting
The Federal Reserve’s policy meeting concludes with Chair Jerome Powell’s focus on economic projections. Progress towards the Fed’s 2.0% medium-term inflation target has stalled, as evidenced by the Employment Cost Index’s 4.2% rise in Q1 and Q4. Investors are awaiting indications about interest rate cuts this year, given the sticky nature of recent inflation data. Future markets now only expect a single quarter-point rate cut by year-end.
Amazon earnings
Amazon’s first-quarter sales increased 13% to $143.3 billion, beating expectations due to interest in artificial intelligence driving cloud-computing growth. Net income tripled to $10.4 billion, and Amazon Web Services’ cloud revenue segment grew 17% to $25 billion, topping consensus estimates. However, the company forecasted revenue of $144.0 billion to $149.0 billion for the current quarter, below consensus expectations. Stifel remains a fan of the group, with a buy rating.
U.S. consumer
The Federal Reserve may be considering comments from major consumer-focused corporations, such as McDonald’s and Starbucks, who are reporting customer struggles due to global inflation. McDonald’s CEO Chris Kempczinski highlighted the persistent consumer pressures, while Starbucks reported a fall in same-store sales for the first time in three years. 3M Company topped expectations for its first quarter but still sees softness in consumer discretionary spend.
Economic Calendar
- 7:00 MBA Mortgage Applications
- 8:15 ADP Jobs Report
- 8:30 Treasury Refunding Announcement
- 9:45 PMI Manufacturing Index
- 10:00 ISM Manufacturing Index
- 10:00 Construction Spending
- 10:00 Job Openings and Labor Turnover Survey
- 10:30 EIA Petroleum Inventories
- 2:00 PM FOMC Announcement
- 2:30 PM Chairman Press Conference
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.