July 20, 2024

US futures slip as stock rally takes a breather

US stock futures slipped on Wednesday, pointing to a possible pullback in the record-setting rally as cooling inflation overseas helped prop up faith in the likelihood of interest-rate cuts early next year.

Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) futures were both down around 0.2%. The tech-heavy Nasdaq 100 (^NDX) paced the declines, with futures falling 0.3%.

Stocks built on their rally on Tuesday, giving the Dow its fifth record close in a row and bringing the S&P 500 closer to its all-time high set in January 2022. Investors have shrugged off hawkish comments from Federal Reserve officials, who have tried to temper expectations that the central bank will quickly turn to bringing down benchmark rates.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

A surprise drop in UK inflation to its lowest level in two years lifted optimism that price pressures are easing in leading economies, with an easing in German wholesale inflation reinforcing that view. Bond yields added to this month’s slide, with the 10-year Treasury yield (^TNX) retreating over 4 basis points to around 3.9%.

But some are questioning whether the faster, earlier rate cuts envisaged would end up pushing the US economy into a downturn. Eyes will be on upcoming data for clues as to whether the Fed can nail a “soft landing”: A read on existing home sales is due Wednesday, ahead of Thursday’s update on GDP and Friday’s reading on PCE inflation, the Fed’s preferred gauge.

In individual corporates, FedEx (FDX) shares tumbled 9% in premarket trading after the delivery company missed quarterly profit expectations. It also cut its full-year revenue forecast amid a drop in US Postal Service demand.

Live1 update

  • Housing in focus as market rally continues

    The US housing market will remain in focus for investors on Wednesday with the weekly read on mortgage applications due out at 7:00 a.m. ET and existing home sales set for release at 9:00 a.m. ET.

    December’s read on consumer confidence from The Conference Board is also due out at 10:00 a.m. ET.

    The market’s rally continued on Tuesday, with the Dow notching another record high and the S&P 500 inching closer to taking out a record of its own.

    The Nasdaq Composite also eclipsed 15,000 on Tuesday for the first time since January 2022, when the tech index was on its way down to start its most challenging year in decades.

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