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Futures inch higher, Target to report - what's moving markets

Published 15/11/2023, 10:24
Updated 15/11/2023, 10:24
© Reuters.

Investing.com -- U.S. stock futures inch up on Wednesday, after the main indices on Wall Street soared in the prior session on optimism that slower-than-projected inflation data may lead the Federal Reserve to end its long-standing policy tightening campaign. Meanwhile, Target (NYSE:TGT) gears up to release its latest quarterly results and industrial activity in China grows at a faster than expected pace in October.

1. Futures tick higher

U.S. stock futures pointed into the green on Wednesday, as investors digested the implications of a softer-than-anticipated October inflation reading on Federal Reserve interest rate policy and looked ahead to more earnings from major retail chains this week.

By 05:00 ET (10:00 GMT), the Dow futures contract had added 46 points or 0.1%, S&P 500 futures had risen by 9 points or 0.2%, and Nasdaq 100 futures had climbed by 50 points or 0.3%.

The three indices finished sharply higher in the previous session after Labor Department figures showed that price growth in the world's largest economy had slowed by more than expected to 3.2% on an annualized basis last month. The data boosted hopes that the Fed's unprecedented run of interest rate hikes aimed at corralling elevated inflation may have peaked.

In their best day since April, the benchmark S&P 500 and tech-heavy Nasdaq Composite moved up by 1.9% and 2.4%, respectively. The 30-stock Dow Jones Industrial Average also gained 1.4%.

Market expectations that the Fed could now cut rates as soon as May of next year increased, while the chance of a reduction in March now stands at around 30%, according to Investing.com's Fed Rate Monitor Tool. The rate-sensitive 2-year U.S. Treasury yield is at 4.853% following a 22 basis-point overnight decline. Yields typically move inversely to prices.

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2. Target to report latest earnings

Target is due to publish its third-quarter results on Wednesday, in a release that could provide a fresh glimpse into the outlook for consumer spending heading into the crucial holiday shopping season.

The big-box retailer is seen posting a 5.22% slide in comparable same store sales during the period, according to Bloomberg consensus estimates. Minneapolis-based Target is also projected to forecast a 4.75% slip in the figure in its current quarter.

In August, the company slashed its full-year sales and profit expectations, saying it is taking a "cautious approach" to the second half of 2023. Target, which typically sells more non-essential items like electronics and patio furniture, has been attempting to expand its daily use offerings to entice inflation-squeezed customers reining in spending on big-ticket products.

Any guidance on price pressures from from Target executives will likely be in focus. On Tuesday, peer Home Depot (NYSE:HD) said that while consumers are still avoiding large purchases in favor of smaller projects, it believes that "the worst of the inflationary environment is behind us."

3. Buffett's Berkshire Hathaway) exits positions in some blue-chip stocks

Warren Buffett's Berkshire Hathaway (NYSE:BRKa) exited its stake in a number of big-name publicly-listed U.S. businesses, including healthcare giant Johnson & Johnson (NYSE:JNJ) and carmaker General Motors (NYSE:GM), according to a closely-watched filing on Tuesday.

It also eliminated smaller positions in logistics firm United Parcel Service (NYSE:UPS), consumer goods corporation Procter & Gamble (NYSE:PG), and Oreo-owner Mondelez International (NASDAQ:MDLZ), while slimming down its ownership of oil major Chevron (NYSE:CVX) and e-commerce firm Amazon.com (NASDAQ:AMZN), among others.

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The cuts helped swell Berkshire's total stock sales this year through September to a net $23.6 billion, versus net purchases of $48.9B in the corresponding period in 2022. At the end of September, its cash pile was at a record high of $157B, thanks in part to higher interest on its Treasury and cash holdings.

Investors normally keep tabs on Berkshire's moves to gain insight into how Buffett, who is widely revered for his storied career of stock-picking, viewed recent market movements.

4. Chinese industrial production outpaces forecasts in October

Chinese industrial output grew by more than expected in October, while retail sales also rose above expectations, bolstering hopes for a recovery in sluggish post-pandemic demand in the world's second largest economy.

Industrial production expanded by 4.6% in October from the prior year, data from the National Bureau of Statistics showed on Wednesday. The reading was faster than projections of 4.4%, and up slightly from 4.5% in September.

Retail sales also increased by 7.6%, beating expectations for a rise of 7.0%, thanks largely to a boost from the Golden Week holiday at the beginning of the month.

Local consumption in October was supported by several liquidity measures undertaken by Beijing, while comparable figures in the prior year were also stymied by the last throes of the government's strict COVID-era policies.

But an overall economic rebound in China remained tenuous, especially as business activity last month still pointed to sustained weakness.

5. Oil slips with U.S. inventories data ahead

Oil prices edged down on Wednesday after the previous session's gains on the back of signs of cooling U.S. inflation.

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By 05:01 ET, the U.S. crude futures traded 0.4% lower at $77.92 a barrel, while the Brent contract dropped 0.4% to $82.17 per barrel.

The U.S. Energy Information Administration will release its first oil inventory report in two weeks in the session, after a systems upgrade last week. Industry data from the American Petroleum Institute published on Tuesday pointed to a weekly build of just over one million barrels in inventories.

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