U.S. stock index futures fell slightly Tuesday as investors prepared for the Federal Reserve’s May policy meeting to kick off. Futures tied to the Dow Jones Industrial Average pulled back by 85 points, or 0.2%. S&P 500 futures traded 0.2% lower as well, while Nasdaq-100 futures fell marginally. The Fed’s two-day policy meeting is expected to conclude with the central bank announcing another 25 basis-point rate hike. Per the CME Group’s FedWatch tool, traders are pricing in 97% chance of a rate hike. Investors will be looking for clues on whether the Fed will keep rates steady after this meeting, or if it will further tighten monetary policy to fight inflation. “We think it will be the last rate hike of this tightening cycle,” wrote Joe Kalish, chief global macro strategist at Ned Davis Research. “The Fed, however, will want to preserve its optionality — just in case the economic data doesn’t come in as expected before the next FOMC meeting on June 13-14. The moves follow modest declines in the Monday’s session. The Dow and Nasdaq Composite both lost about 0.1%, while the S&P 500 finished just slightly below its flatline. Investors were focused on the bank sector following the announcement that JPMorgan Chase won the weekend auction for troubled First Republic Bank. As part of the agreement, JPMorgan acquired all of the regional bank’s deposits and a “substantial majority of assets.” CEO Jamie Dimon said the deal should help end part of the industry crisis, which was initially prompted by the closure of Silicon Valley Bank in March. Weighing on sentiment was word from Treasury that the country may hit the debt ceiling sooner than expected. Treasury Secretary Janet Yellen warned that the U.S. may run out of measures to pay its debts as early as June 1, earlier than the late July deadline Goldman was estimating. Wall Street will also will watch for data on job openings, factory orders and light vehicle sales on the economic front. The earnings season rolled on, with Uber and Pfizer reporting better-than-expected results. Uber shares popped nearly 7%, while Pfizer advanced more than 1%. Ford, Starbucks, Advanced Micro Devices and Caesars Entertainment are set to report after the bell. The Reserve Bank of Australia unexpectedly hiked its cash rate by 25 basis points to 3.85% after holding its benchmark policy rate at steady at 3.6% in their April meeting. The Australian dollar strengthened by 0.6% to 0.6677 against the U.S. dollar after the move. In Australia, the S&P/ASX 200 fell 0.92% to close at 7,267.4 as financial stocks led losses. Asia-Pacific markets were largely mixed on Tuesday as most markets returned after the long Labor Day weekend. Japan’s Nikkei 225 advanced 0.12% to close at 29,157.95 and the Topix fell 0.12% to end the day at 2,075.53. South Korea’s Kospi closed 0.91% up at 2,524.39 as the nation’s inflation rate slowed to a 14-month low of 3.7%. The Kosdaq climbed 1.52% and closed at 855.61. Hong Kong’s Hang Seng index climbed 0.22% in its final hour of trade, while the Hang Seng Tech index gained marginally. Mainland Chinese markets were closed for a holiday Tuesday. Oil prices fell Tuesday, extending losses seen in the previous session, as weak economic data from China and expectations of a U.S. interest rate increase weigh on the market. Brent crude was down 0.5%, or 39 cents, to $79.92 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 0.6%, or 45 cents, to $75.21 a barrel. Both benchmarks fell by more than $1 in their last session. Gold prices rose slightly on Tuesday as investors looked for hints on future interest rates from the U.S. Federal Reserve’s policy meeting. Spot gold was 0.3% higher at $1,987.93 per ounce, while U.S. gold futures were up 0.2% to $1,996.70.
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