Wall Street Prepared For Tepid Open With Focus On Fed Minutes

On Wednesday, US stock indexes were scheduled for a tepid open, with investors keeping an eye on the minutes of the meeting of the Federal Reserve last month to give some hints about the economy’s health and the pace of the hikes in interest rates for curbing inflation.

Central bank actions in focus

The first half of the year was a brutal one for the equities market globally, which has made investors extremely nervous. They are now focused on the actions of the central bank while trying to gauge the impact of the aggressive increase in interest rates on global economic growth.

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The policymakers of the US central bank have already made a case for bigger hikes in the interest rates, which has prompted markets to price in yet another 75 basis points increase in July. Minutes of the policy meeting of the Federal Open Market Committee (FOMC) in June, where they raised interest rates by 75 basis points, is scheduled for release on Wednesday at 1800 GMT.

Market analysts said that the fall in the price of commodities indicated that energy prices and agricultural prices have probably hit their peak, which is a good thing in terms of inflation. However, they added that the Fed is unlikely to slow down right away and the FOMC minutes will probably give hints of another hike in July at the same pace.

Indexes and bond markets affected

The Russia and Ukraine war, the highest inflation in decades, and the hawkish stance of the US Federal Reserve have taken a toll on indexes. The S&P 500 recorded its biggest-ever drop in the first six months of the year since 1970. It has already lost more than 20% in the year.

A major part of the US bond yield curve was inverted for the second day in a row on Wednesday, which indicates that the biggest bond market in the world is experiencing angst over the risks of economic recession.

Dow minis had shed 0.23% or 72 points, while S&P 500 e-minis had lost 0.3% or 11.5 points. There was also a 0.38% decline in Nasdaq 100 e-minis, as they declined by 45.25 points. This week, US jobs data is also set for release, including the nonfarm payrolls report for June on Friday, which may offer clues about economic health and affect the central bank’s policy decisions.

Individual performances

There was a 0.4% fall in the shares of Amazon.com in premarket trading after the antitrust watchdog in Britain launched an investigation into the company. A 2.2% rise was recorded in Altria Group Inc. after a marketing denial order was temporarily stayed by the US health regulator on the e-cigs of Juul Labs Inc.

There was a 7.2% and 3.4% decline in DoorDash Inc. and Uber Technologies Inc., respectively. This happened after Amazon.com disclosed that it was purchasing a 2% stake in Grubhub, the US food delivery business launched by Just Eat Takeaway.com, which is currently struggling.

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