Stock Futures Rise as Fed Decision Looms

Key Points

  • Dow Jones, S&P 500, and Nasdaq 100 futures each saw a 0.1% rise as investors awaited the Fed’s rate decision and May’s inflation data.
  • Oracle’s stock surged 9% on new cloud partnerships with Google and OpenAI, despite missing earnings expectations.
  • Apple’s AI announcements lifted the S&P 500 and Nasdaq to record highs, though the Dow Jones fell by 0.31%.
  • Investors expect the Fed to maintain interest rates but are wary of persistent inflation and job market strength.
  • European stocks rose, with the Stoxx 600 up by 0.35%, led by banking sector gains.

On Wednesday, stock futures saw a slight rise as investors anticipated the Federal Reserve’s interest rate decision and the release of May’s consumer inflation data. The Dow Jones Industrial Average futures increased by 43 points, a 0.1% gain, while S&P 500 and Nasdaq 100 futures each added 0.1%.

Oracle Soars 9% on Cloud Deals with Google, OpenAI

Oracle’s stock surged by 9% after announcing new cloud partnerships with Google and OpenAI. This positive market reaction occurred despite the company missing earnings expectations in the latest quarter, highlighting the strong potential seen in Oracle’s cloud initiatives.

Apple Lifts S&P 500, Nasdaq to Record Highs

On Tuesday, a rotation into Apple shares lifted the S&P 500 and Nasdaq Composite to new closing highs. Apple’s announcement of its push into artificial intelligence at its developer conference spurred investor enthusiasm. However, the Dow Jones Industrial Average fell by 0.31%, contrasting with the gains in other indices.

Investors Watch Fed’s Rate Decision and Powell’s Comments

Investors are closely monitoring the conclusion of the Federal Reserve’s two-day policy meeting on Wednesday, which will feature an interest rate decision and a press conference with Fed Chair Jerome Powell. The market widely expects the Fed to keep the benchmark overnight borrowing rate between 5.25% and 5.5%. Concerns persist about a strong jobs report and persistent inflation, suggesting that higher interest rates might continue for a longer period.

Quincy Krosby, Chief Global Strategist for LPL Financial, noted that the market will be focused on any mention within the Fed statement, the dot plot, or Chair Powell’s comments of concerns regarding the labour market, given Powell’s remarks that indications of deterioration could prompt the easing of rates.

Inflation Data to Show 0.1% Increase in May CPI

May’s consumer price index (CPI) data, forecasted to show a 0.1% increase from April and a 3.4% year-over-year rise, is also highly anticipated. This data will significantly influence market expectations on inflation and future monetary policy.

European Stocks Rise, Stoxx 600 Gains 0.35%

European markets opened higher on Wednesday, with the Stoxx 600 index rising by 0.35% at 8:14 a.m. London time, reflecting a broadly positive start across most sectors. The FTSE 100 increased by 0.56%, while France’s CAC 40 and Germany’s DAX gained 0.35% and 0.39%, respectively. Banking stocks led the gains, up by 0.84%, whereas the automotive sector lagged, declining by 0.78%.

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