U.S. stock futures indicated a downward trend on Wednesday following a record close for the S&P 500 in the previous session. Investors are poised to analyze remarks from Federal Reserve Governor Adriana Kugler, who is expected to join a series of policymakers commenting on last week’s significant interest rate cut.
1. Futures Slip
U.S. stock futures fell slightly after the benchmark S&P 500 achieved its second consecutive record high. As of 03:26 ET (07:26 GMT), the S&P 500 futures contract declined by 12 points or 0.2%. Meanwhile, Dow futures dropped by 96 points, also down 0.2%, and Nasdaq 100 futures fell by 77 points, or 0.4%.
The main indexes on Wall Street had previously closed higher, buoyed by gains in international markets following China’s announcement of new stimulus measures aimed at revitalizing its economy. U.S.-listed shares in Chinese companies surged, alongside gains for copper and lithium miners driven by rising metals prices. However, investor sentiment was dampened by a Conference Board report revealing an unexpected decline in U.S. consumer confidence for September, primarily due to concerns regarding the labor market.
2. Fed’s Kugler Set to Address Markets
Federal Reserve Governor Adriana Kugler is scheduled to speak on Wednesday, with market participants eager to hear her insights on the recent substantial interest rate cut. Kugler will deliver her remarks at the Harvard Kennedy School at 16:00 ET, according to the Fed’s announcement. Additional comments from other Fed officials, including Chair Jerome Powell, are expected throughout the week.
On Tuesday, Fed Governor Michelle Bowman defended her vote against the significant 50-basis point interest rate cut, advocating for a more traditional quarter-percentage point reduction. She cited persistent inflation levels that remain “uncomfortably above” the Fed’s target. This position contrasted with several other officials who supported the larger cut, arguing it was necessary to alleviate economic pressures amid easing inflation and increasing labor demand strains.
3. Investigation into SAP and Carahsoft
Bloomberg News reported that the U.S. government is investigating German software company SAP and product reseller Carahsoft over allegations of overcharging government agencies for at least a decade. The Department of Justice is examining whether SAP conspired with Carahsoft to fix inflated prices for sales to the U.S. military and other government entities, with the investigation ongoing since at least 2022. The FBI and military investigators raided Carahsoft’s Virginia offices on Tuesday.
4. Gold Prices Reach New Highs
Gold prices experienced a slight decline after reaching a new record high earlier on Wednesday. By 03:28 ET, spot gold was down 0.1% at $2,654.31 per ounce, having earlier peaked at $2,670.43 during Asian trading hours. The potential for lower interest rates has supported gold, as traders see a decreased opportunity cost for investing in non-yielding assets. Additionally, safe-haven demand for gold has increased amid rising tensions in the Middle East. Upcoming comments from Fed officials and the release of the Fed’s preferred inflation gauge on Friday could further clarify future borrowing costs.
5. Oil Prices Retreat
Crude oil prices dipped on Wednesday as traders reassessed the impact of China’s recent monetary stimulus. As of 03:30 ET, Brent crude fell 0.5% to $74.08 per barrel, while U.S. crude futures (WTI) were down 0.7% at $71.08 per barrel. Both benchmarks had risen nearly 2% on Tuesday following China’s announcement of new stimulus measures. However, traders believe that more substantial assistance may be necessary to enhance the economic outlook for the world’s largest crude importer, according to Reuters. Nevertheless, declining U.S. crude oil inventories provided some market support, as data from the American Petroleum Institute indicated a reduction of 4.34 million barrels in crude stocks last week. Official figures from the Energy Information Administration are expected later in the day.
