© Reuters
Investing.com – U.S. stock futures pointed to a negative start on Wall Street as markets braced for further comments from Federal Reserve Chair Jerome Powell. Retailers Costco (NASDAQ:) and Kroger (NYSE:) are expected to report their latest earnings, while shares of middle-market lender NYCB end a rollercoaster ride higher after a $1 billion capital injection from an investor group.
1. Futures are trending downward
U.S. stock futures fell slightly on Thursday as investors awaited Federal Reserve Chairman Jerome Powell's second hearing on Capitol Hill and prepared for the release of key jobs data later in the week.
As of 03:26 ET (08:26 GMT), the contract had lost 18 points, or 0.4%, had lost 99 points, or 0.5%, and was down 117 points, or 0.3%.
Wall Street's major averages closed higher in the previous session after Powell told a House committee that he expected the Fed to eventually cut interest rates this year from their more than two-decade peak. But he noted that policymakers wanted to see more evidence that inflation was falling sustainably toward the central bank's 2% target before imposing any cuts. Powell is scheduled to testify today before the Senate Banking, Housing and Urban Affairs Committee.
Although Powell's comments stoked optimism that the Fed will eventually cut interest rates this year, enthusiasm was dampened after Minneapolis Fed chief Neel Kashkari said he expects no more than two cuts in 2024.
Analysts at ING argued in a note to clients that signs of a slowing labor market, sluggish household income growth, depletion of pandemic-era savings and elevated interest rates “will lead to weak consumer spending.”
“This in turn is likely to continue to dampen price pressures in the economy,” ING analysts said, adding that they forecast an initial cut at the June meeting of the Federal Reserve's Federal Open Market Committee to set interest rates.
2. Costco, Kroger ahead
A slowing tide of quarterly corporate earnings is expected Thursday at Costco and Kroger.
Membership retailer Costco has been boosted by stronger demand from cost-conscious shoppers for cheaper groceries at a time of stubborn inflation and high borrowing costs.
In December, the company, which offers products in bulk to customers, reported a surge in sales of essential items such as fresh groceries and sundries. More expensive consumer goods categories such as appliances and televisions also saw some improvement, Costco executives added.
Meanwhile, Kroger lowered its full-year sales outlook in November, partly due to more moderate grocery prices and lower consumer spending. The Ohio-based supermarket chain has launched more promotions to counter these trends, but Chief Financial Officer Gary Millerchip warned that unit growth rates have not “improved at the pace we would have expected.”
Markets will also be watching for comments from Kroger on its planned $24.6 billion acquisition of rival Albertsons (NYSE:). U.S. trade regulators have filed a lawsuit to block the deal, which would be the largest supermarket collaboration in U.S. history, saying it was anti-competitive.
3. NYCB secures cash infusion
shares New York Community Bancorp (NYSE:) settled in the green after a choppy session on Wednesday after the struggling middle-market lender announced it had secured $1 billion from a group of investors.
Former U.S. Treasury Secretary Steven Mnuchin's Liberty Strategic Capital, as well as investment groups Reverance Capital Partners, Citadel Global Equities, Hudson Bay Capital and others participated in the cash infusion, NYCB said.
NYCB's stock price fluctuated throughout the trading day, falling 45% before the announcement, then rising 30%, and finally closing up more than 7%.
The bank has been under intense pressure since it reported an unexpected fourth-quarter loss on Jan. 31, largely due to increased provisions related to its exposure to the struggling commercial real estate market. Last week, concerns about NYCB were heightened after the company announced that “material weaknesses” had been discovered in its financial reporting controls.
4. Chinese exports and imports rise more than expected in the first two months of 2024
China's trade surplus grew more than expected in the first two months of 2024, reflecting some resilience in export demand, while imports were also boosted by a surge in holiday spending.
Official data showed on Thursday that China's trade balance was $125.16 billion in the January-February period. The value was above estimates of a surplus of $110.30 billion and higher than December's figure of $75.34 billion.
Exports rose significantly more than expected in the reporting period by 7.1% year-on-year, exceeding expectations of 1.9%. Imports rose 3.5% year-on-year in the January-February period, above forecasts of 1.5%.
5. Oil prices are falling
Oil prices fell in European trading on Thursday, ending a recent rally as markets digested demand signals from top importer China.
Data from China's General Administration of Customs showed that imports into the country rose 5.1% in the first two months of the year compared to the same period last year.
Traders also recognized signals about US monetary policy. While Federal Reserve Chairman Jerome Powell's pledges of interest rate cuts boosted oil prices on Wednesday, later comments from Minneapolis Fed Chairman Neel Kashkari dampened that optimism.
May expiring crude futures fell 0.2% to $82.77 a barrel, while West Texas Intermediate crude futures fell 0.2% to 78 at 03:27 ET (08:27 GMT). $22 per barrel fell. Both contracts rose about 1% each in the previous session.
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