Wall Street stumbled in Tuesday’s premarket trading ahead of a busy week of inflation reports and the Federal Reserve’s latest interest rate policy decision.
Futures for S&OP 500 was down 0.3% before the bell, while Dow Jones Industrial Average futures were down 0.4%.
Eli Lilly shares rose 2.2% in premarket trading after the company won support from federal health authorities for its Alzheimer’s drug donanemab. Food and Drug Administration advisers voted unanimously that the drug’s ability to slow the disease outweighs its risks, setting the stage for its full approval later this year.
General Motors got a small boost shortly after the automaker announced its board approved a $6 billion stock buyback. Its shares rose another 1% and are up more than 32% this year.
Treasury yields fell a bit in the bond market ahead of reports later in the week that will show if inflation has improved last month, both at the consumer and wholesale level.
On Wednesday, the Federal Reserve will announce its latest interest rate decision. Virtually no one expects the main interest rate to change at that time. But policymakers will publish their latest predictions about where they see interest rates and the economy heading in the future.
When Fed officials released their latest projections in March, they indicated that the typical member predicted about three interest rate cuts in 2024. That projection will almost certainly fall this time. Wall Street traders are largely betting on just one or two rate cuts in 2024, according to data from CME Group.
Data on the economy has been mixed recently and investors are hoping for a slowdown that doesn’t amount to a recession and is of the right magnitude. A cooling would put less upward pressure on inflation, which could encourage the Federal Reserve to cut its key interest rate from its most punishing level in more than two decades.
Elsewhere in Europe, at midday, Britain’s FTSE 100 lost 1% after government data showed the jobs market was cooling. The unemployment rate from February to April rose to 4.4%, the highest level since September 2021.
The CAC 40 in Paris slid 1.2% and Germany’s DAX fell 0.8%.
In Asian trading, Tokyo’s Nikkei 225 index gained 0.3% to 39,134.79 as investors awaited the outcome of a Bank of Japan meeting. increased its reference interest rate in March to a range of 0 to 0.1%, from -0.1%, in its first increase of this type in 17 years.
Analysts said markets were leaning towards two rate hikes by the end of this year, with broad expectations of further rate hikes as early as July.
Hong Kong’s Hang Seng sank 1% to 18,176.34 and the Shanghai Composite lost 0.8% to 3,028.05 after reopening from a public holiday. Markets remained cautious ahead of China’s inflation report due on Wednesday.
S of Australia&P/ASX 200 fell 1.3% to 7,755.40. South Korea’s Kospi gained 0.2% to 2,705.32.
In other trading, benchmark US crude fell 12 cents to $77.62 per barrel in electronic trading on the New York Mercantile Exchange. Oil has fallen 12.8% since the beginning of April, and weak demand has given drivers some relief at the gas pump as the summer travel season kicks into gear.
Brent crude, the international standard, fell 11 cents to $81.52 per barrel.
The US dollar rose to 157.07 Japanese yen from 157.04 yen. The euro fell to $1.0734 from $1.0766.
On Monday, the S&P500 rose 0.3% to 5,360.79, surpassing its all-time high last week. The Nasdaq Composite also set a record after rising 0.3% to 17,192.53, while the Dow Jones Industrial Average rose 0.2% to 38,868.04.
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