US futures fall as belief in interest rate cuts weakens

US stock futures are pointing to more losses on Wednesday as investors eagerly await a speech by Federal Reserve Chair Jerome Powell. The S&P 500 (^GSPC) futures are down 0.2%, with Dow Jones Industrial Average (^DJI) futures just below the flatline. Nasdaq 100 (^NDX) futures lead declines, down nearly 0.4% after major gauges closed in a sea of red.

Since the strong start of the year, stocks have drifted away as robust economic data dampened hopes for three Fed rate cuts. Investors have adjusted their expectations and are now anticipating a smaller and later easing than previously projected by policymakers.

All eyes are now on Powell’s upcoming speech on the economic outlook, set for later Wednesday. Investors will be scouring his words for hints on whether the Fed’s June meeting will bring any policy changes. Additionally, appearances by Michael Barr and other Fed officials will also be closely watched.

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Investors are also closely monitoring the bitter proxy battle between Disney and activist investor Nelson Peltz, with the results of a shareholder vote expected later on Wednesday. Reports suggest that Disney may have secured enough backing to ward off a board shake-up proposed by Peltz’s Trian.

In single stock movements, Intel (INTC) shares fell around 5% in premarket trading after the chip company reported larger operating losses in its foundry business. On the other hand, rival TSMC (TSM) had to halt some chipmaking activities following a major earthquake in Taiwan, raising concerns about its role as a supplier to Apple (AAPL) and Nvidia (NVDA).

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Live – Tesla gets put into the penalty box by JP Morgan

JP Morgan analyst Ryan Brinkman has slashed the price target on Tesla (TSLA) to $115 from $130, projecting a 30% downside from current levels due to lackluster deliveries. Brinkman’s revised estimates indicate a first-quarter EPS of $0.42, down from a prior estimate of $0.69, with a significant free cash outflow of $1.3 billion. The report highlights Tesla’s current stock price as highly expensive and raises doubts about the company’s ability to reach Brinkman’s reduced price target.

Intel opens its books further, and the stock gets hit

Intel (INTC) shares are down 4% pre-market after disclosing losses of $7 billion in its manufacturing business in 2023. Despite CEO Pat Gelsinger’s efforts to focus on the foundry business, the numbers surprised many on Wall Street. The company’s sales fell 31% year on year to $18.9 billion, raising concerns about the cost of the company’s ventures into manufacturing chips for others. Stifel analyst Ruben Roy predicts a challenging road ahead for Intel amidst increased competition from rivals and limited upside potential in the medium term.

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