Benzinga - by Shanthi Rexaline, Benzinga Editor.
Stock futures traded higher on Wednesday as buying momentum gradually builds amid hopes that the Federal Reserve may announce a pause at the month-end’s rate-setting meeting. Futures sustained these gains, even in light of Fed Governor Michelle Bowman suggesting that more rate hikes may be necessary to combat inflation.
Traders are now looking forward to additional Fed speeches and the release of the minutes from the September Fed meeting scheduled during trading hours. The producer price inflation report for September, falling bond yields, and concerns about the upcoming earnings season are also on the minds of market participants.
Cues From Tuesday’s Trading:
On Tuesday, more Fed officials hinted at a potential pause, leading to higher openings and morning rallies in the major indices. After some retracement in mid-session, the averages engaged in a consolidation phase for the remainder of the day, closing moderately higher.
The Nasdaq Composite, S&P 500, and Dow Industrials Average posted gains for the third consecutive session, achieving their best levels in about three weeks.
Small-cap stocks, which had been underperforming in recent sessions, rallied strongly, with the Russell 2,000 Index erasing year-to-date losses.
Most sectors advanced, with the exception of the energy sector, and consumer, material, and utility stocks led the gains.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.58% | 13,562.84 |
| S&P 500 Index | +0.52% | 4,358.24 |
| Dow Industrials | +0.40% | 33,739.30 |
| Russell 2000 | +1.14% | 1,775.95 |
Analyst Color:
Given a tough September that capped off a difficult third quarter, the solid economic fundamentals, and improving seasonal factors, Commonwealth Financial Network Chief Investment Officer Brad MacMillan expects better results for the market through the end of the year.
The analyst expects the month of October and the fourth quarter to be more mixed for the economy. While job growth remains strong, external factors such as the United Auto Workers strike, a potential government shutdown in November, and the war that just started between Israel and Hamas, could weigh on growth, he said.
Futures Today
Futures Performance On Wednesday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.39% |
| S&P 500 | +0.29% |
| Dow | +0.28% |
| R2K | +0.12% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) gained 0.29% to $435.79 and the Invesco QQQ ETF (NASDAQ:QQQ) rose 0.40% to $370.08, according to Benzinga Pro data.
Upcoming Economic Data:
Bowman, who spoke at the Reinventing Bretton Woods Committee‘s Marrakech Economic Festival earlier on Wednesday, said the global central banks fighting inflation should bring it back to target.
On the scenario in the U.S., Bowman said inflation remains well above the FOMC’s 2% target and that “Domestic spending has continued at a strong pace, and the labor market remains tight.”
“This suggests that the policy rate may need to rise further and stay restrictive for some time to return inflation to the FOMC’s goal,” she added. Her views diverged from those of some central bank officials who spoke earlier this week.
The Bureau of Labor Statistics will release the producer price inflation report for September at 8:30 a.m. EDT. Economists, on average, expect the producer price index to rise 0.3% month-over-month in September, slower than the 0.7% increase in August. Core producer prices may have increased at a stable rate of 0.2%. On a year-over-year basis, the headline and core producer prices indices may have increased 1.6% and 2.3%, respectively, in September. This compares with the August growth of 1.6% and 2.3%.
Fed Governor Christopher Waller is scheduled to speak at 10:15 a.m. EDT.
The Energy Information Administration is due to release its short-term energy outlook report at 12 p.m. EDT.
Atlanta Fed President Raphael Bostic, a member of the Federal Open Market Committee, will make a public appearance at 12:15 p.m. EDT
The Treasury is set to auction 10-year notes at 1 p.m. EDT.
The Fed is scheduled to release the minutes of the September FOMC meeting at 2 p.m. EDT.
See also: Futures Vs. Options
Stocks In Focus:
- Novo Nordisk A/S (NYSE:NVO) rose over 2.50% in premarket trading after the Danish biotech said it decided to stop a trial that evaluated the efficacy of semaglutide for renal impairment in people with type 2 diabetes and chronic kidney disease. The decision followed a recommendation from an independent Data Monitoring Committee, which concluded that the results from an interim analysis met certain pre-specified criteria for stopping the trial early for efficacy.
- The Novo Nordisk news sent shares of kidney dialysis company DaVita, Inc. (NYSE:DVA) down by about 16%.
- German shoemaker Birkenstock (NYSE:BIRK) could also be in focus as its shares debut on the NYSE. The company priced the initial public offering at $46 per share, the Wall Street Journal reported.
Crude oil futures fell 0.40% to $85.63 in early European session on Wednesday after settling the previous session down 0.47%.
The benchmark 10-year Treasury note fell 0.093 percentage points to 4.562%.
Most Asian markets advanced on Wednesday, encouraged by the positive close by Wall Street stocks. South Korea’s Kospi and Hong Kong’s Hang Seng Index led the day’s advances. European stocks traded on a mixed note in late-morning trading ahead of U.S. wholesale price inflation data.
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