Wall Street Braces for Fed’s Tightrope Act as Stock Futures Edge Up
On Wednesday, U.S. stock index futures tiptoed higher, reflecting growing anticipation that the Federal Reserve might momentarily hit the pause button on its tightening spree. However, lurking beneath this optimism, the nagging worry of sustained higher interest rates kept investors in a state of alert.
As the clock ticked towards 2 p.m. ET, when the U.S. central bank was set to wrap up its meeting, all eyes were on the potential outcome. The consensus expectation was for the Fed to maintain its key rate in the range of 5.25% to 5.50%. Investors hungered for economic projections and hung onto every word from Chair Jerome Powell, hoping for hints about the future of rates and inflation.
Recent economic data had offered a glimmer of hope, suggesting a gentle easing in core inflation. This sparked speculation that interest rates might have reached their zenith. However, the specter of soaring oil prices loomed large, casting a shadow on the inflation landscape. This ambiguity gave the Fed just enough wiggle room to entertain the possibility of keeping rates elevated for an extended dance on the monetary tightrope.
Fed meeting looms, more tech IPOs ahead, Evergrande slips – what’s moving markets
The U.S. Federal Reserve is tipped to keep interest rates steady on Wednesday, placing added emphasis on new economic projections from the central bank’s officials that could hint at the path ahead for monetary policy this year. Elsewhere, Instacart (NASDAQ:CART) shares dip in U.S. premarket trading, paring back some gains made in their debut on Tuesday, as hopes grow for a revival in initial public offerings.
1. Fed set to leave rates unchanged
The Federal Reserve is widely expected to leave interest rates steady later today, as investors attempt to gauge how the U.S. central bank will approach monetary policy throughout the rest of the year.
According to Investing.com‘s Fed Rate Monitor Tool, there is a 98% chance that the rate-setting Federal Open Market Committee will keep borrowing costs unchanged at a range of 5.25% to 5.50%.
With markets mostly pricing in a rate hold, one of the major questions will center around whether the Fed feels it may need to resume a long-standing policy tightening campaign later on in 2023 to help tamp down persistent inflation.
Data last week presented a somewhat mixed picture for price gains in the world’s largest economy. Annual headline inflation climbed by more than anticipated in August because of a surge in fuel costs, although the underlying reading slowed to its lowest level in almost two years.
Attention will likely focus in on a fresh batch of officials’ individual economic and policy projections, also known as the “dot plot,” which could point to broad support for one additional quarter-point rate increase this year. However, this hike remains far from a certainty: while the Fed may be willing to maintain rates at a higher level for longer, it does not want to place too much downward pressure on the wider economy.
2. Futures edge higher with Fed decision looming
U.S. stock futures moved up slightly on Wednesday morning, but remained close to the flatline, with all eyes on the Fed’s crucial rate decision.
At 05:27 ET (09:27 GMT), the Dow futures contract added 39 points or 0.1%, S&P 500 futures climbed by 6 points or 0.1%, and Nasdaq 100 futures inched up by 22 points or 0.1%.
The main indices on Wall Street fell in the prior session. U.S. Treasury yields also touched a 16-year high, in a sign that traders are betting that Fed Chair Jerome Powell will suggest the central bank will press on with the higher-for-longer strategy.
There is currently a little more than one-in-four chance that the Fed will raise rates at its November meeting and just over a one-in-three possibility at its December gathering, the Fed Rate Monitor Tool showed.
3. Instacart shares point lower premarket after debut jump
Shares in online grocery delivery service Instacart were indicated to open lower on Wednesday, retreating from a 12% gain in their first day of trading in New York in the previous session that reflected a nascent enthusiasm for new listings.
The stock ended the session at $33.70 per share on the Nasdaq, giving San Francisco-based Instacart a fully-diluted value of $11.2 billion. It had earlier surged by as much as 40% to $42 a share shortly after trading began.
Despite the stellar initial public offering, Instacart shares still have some way to climb to reach the lofty $39B valuation assigned to the company by private investors during the pandemic, when demand was boosted by a boom in at-home food orders.
But Instacart’s well-received debut still points to an emerging optimism for the IPO market, which had recently gone dormant due to economic uncertainty, heightened interest rates, and slipping tech valuations. SoftBank-backed chip designer Arm ‘s (NASDAQ:ARM) shares leapt to $63.59 on their first trading day last week, but have since slipped closer to its offer price of $51.
4. Disney unveils theme park plans, shares drop
Shares in Walt Disney (NYSE:DIS) fell on Tuesday after the entertainment giant announced plans to spend around $60B on expanding its theme parks, cruise lines and resorts over the next decade.
New projects at locations in the U.S. and abroad could help drive returns, Disney said, adding that popular franchises like “Frozen” and “Black Panther” could have a possible presence at its parks in the future. The investment boosts a division that has been a strong performer for the company, offsetting weakness at its traditional television business and streaming services as well as disappointing ticket sales for recent movie releases.
Operating income from the parks has topped the profit garnered by the so-called linear TV unit over the past three quarters, thanks in large part to a post-COVID jump in visitors.
However, analysts at Citigroup (NYSE:C) said in a note that investors were potentially worried about pressure on free cash flow stemming from the heavier spending on parks.
5. Oil slips; Fed in focus
Oil prices fell Wednesday, pulling back from 10-month highs, as markets digested a forecast of a large drawdown in U.S. crude inventories ahead of the Federal Reserve interest rate decision.
Data from the industry body American Petroleum Institute, released on Tuesday, indicated that U.S. crude inventories fell by over 5 million barrels last week. The official data is due later on Wednesday.
Yet, despite this hefty draw, traders are seemingly taking some profit ahead of the crucial Fed decision after worries of a substantial supply deficit this year had sent prices soaring to their highest levels since November last year.
By 05:28 ET, the U.S. crude futures traded 1.3% lower at $89.33 a barrel, while the Brent contract dropped 1.2% to $93.19.
In a dazzling twist of fate that unfolded on Tuesday, Horizen Labs and Pyth Network strutted onto the stage with a grand partnership announcement that would make even blockchain aficionados do a double take. Their mission? To bring forth decentralized Oracle services for EON, Horizen’s Ethereum Virtual Machine (EVM)-compatible smart contracting platform. This collaboration doesn’t just promise a breath of fresh air; it’s more like a gust of blockchain innovation set to turbocharge EON’s world.
The beating heart of this partnership throbs with the promise of seamlessly infusing Pyth Network’s oracle wizardry into EON’s DNA. The grand plan? To give EON a supercharged makeover, arming developers with the market insights they crave to take their smart contracts to the next level. Imagine the ripple effect: it’s like tossing a pebble into the blockchain pond, and the waves could very well reach the sunny shores of decentralized finance (DeFi), the playful realms of gaming, and the vibrant landscapes of non-fungible token (NFT) platforms.
Now, let’s talk about EON – the brainchild of the brilliant minds at Horizen Labs. It’s not just an ordinary EVM-compatible smart contracting platform; it’s more like a Swiss Army knife for developers building customized blockchains. Need a specific consensus mechanism? EON’s got it. Craving faster transaction processing speed? EON delivers. Fancy privacy features or diving into crypto-economies? Well, EON’s the place to be.
So, brace yourselves for this blockchain rollercoaster, as Horizen Labs and Pyth Network join forces to sprinkle a touch of magic into EON’s world. The future looks brighter, smarter, and a whole lot more decentralized.
General Mills Defies Gravity: Posts Q1 Earnings Dip, But Still Whisks Past Expectations Amid Inflation Storm
In a world where supply chains teeter like tightropes and inflation looms like a menacing thundercloud, General Mills (NYSE:GIS) has shown remarkable resilience. The Minneapolis-based food processing juggernaut, owner of iconic brands like Cheerios and Betty Crocker, recently reported a slight dip in its first-quarter adjusted income. But don’t let that fool you, dear investors; this is a story of triumph against the odds.
In the three months ending on August 27, General Mills saw its adjusted diluted earnings per share in constant currency slip by a modest 1% compared to the same period last year, landing at $1.09. While the skeptics may have raised an eyebrow, the company effortlessly strutted past the Bloomberg consensus estimates of $1.08, leaving them in the dust.
So, what’s the secret ingredient to General Mills’ recipe for success? Well, it turns out it’s a blend of supply chain wizardry and the unwavering resilience of consumers in the face of inflationary headwinds.
Beneath the hood, General Mills revved up its bottom line with a remarkable 4% year-on-year surge in net sales, roaring to a mighty $4.90 billion. Analysts, who had donned their forecasting hats, expected a slightly more modest $4.88 billion. How did they manage this feat? It’s simple – a dash of higher price realization and a pinch of mix adjustments artfully balanced out lower pound volume.
In the ever-turbulent world of business, where many are left scrambling for stability,
General Mills stands tall, defying gravity and delivering results that leave the competition in a cloud of Cheerios dust.
Investing is like a financial treasure hunt where you don your metaphorical pirate hat and embark on a quest for buried wealth. It’s a thrilling adventure where you navigate the unpredictable seas of the market, using your wits and a well-crafted treasure map – your investment strategy – to seek out those precious doubloons of profit. But beware, matey, for there are storms of volatility and the occasional kraken-sized market crash to contend with. The key is to stay the course, diversify your booty across different asset classes, and, as any seasoned investor will tell you, never underestimate the power of a good parrot… or a solid portfolio. So, hoist your financial flag, set sail, and may your investments always yield a bounty as vast as the seven seas!