(Reuters) – Wall Street’s main indexes eyed a lower open on Thursday as elevated oil prices muddled the inflation outlook amid worries over prolonged restrictive monetary policy, while investors assessed data and awaited Federal Reserve chief Jerome Powell’s remarks.
The scope for interest rates staying higher for longer than anticipated has solidified with soaring energy prices keeping headline inflation elevated.
Deepening the concerns, U.S. oil futures jumped to a more than one-year high on Thursday.
Riding on the back of higher crude prices, energy is set to emerge as the only major S&P 500 sector to notch monthly gains. Meanwhile, rate-sensitive information technology and real estate were on track to be the worst hit.
Further, data showed the U.S. economy maintained a fairly strong pace of growth in the second quarter, the government confirmed on Thursday, and appears to have gathered momentum this quarter amid a resilient labor market.
“A sharp rise in unemployment and claims isn’t a prerequisite for the Fed to stop raising rates,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
“Fed Chair Powell made clear last week, however, that the Fed needs to see other signs that the labor market is continuing to come into better balance if it is to refrain from further rate hikes.”
Traders’ bets on the benchmark rate remaining unchanged in November and December stood around 78% and 58%, respectively, according to CME’s FedWatch tool. Meanwhile, a 25-basis-point rate cut is being priced in as early as March, growing to over 31% in June and July.
As U.S. Treasury yields resumed their uptrend after briefly slipping following the data, megacap growth stocks including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) shed between 0.1% and 1.2% in premarket trading.
At 8:52 a.m. ET, Dow e-minis were down 32 points, or 0.09%, S&P 500 e-minis were down 6.75 points, or 0.16%, and Nasdaq 100 e-minis were down 45 points, or 0.31%.
The S&P 500 and the Nasdaq are on course for their worst monthly performance of the year as Treasury yields hit multi-year highs on uncertainty around interest rates.
All the three indexes are set for their first quarterly decline in 2023.
Also on radar will be comments by Powell at 4 p.m. ET, as well as remarks by voting member Lisa Cook during the day.
With a partial government shutdown just three days away, a procedural vote on a bipartisan short-term spending measure by the Senate on Thursday will also be closely watched.
Among individual movers, Micron Technology (NASDAQ:MU) dropped 2.8% after forecasting a bigger-than-expected first-quarter loss.
Workday (NASDAQ:WDAY) dipped 9.8% after the human resources software company lowered its subscription revenue growth outlook for the next three years.
Meme darling GameStop (NYSE:GME) jumped 7.3% after the company named billionaire activist investor Ryan Cohen as its CEO and chairman.
Source: Economy - investing.com
