Futures Decline, S&P 500 Hits New Record Close, Fed Commentary – What’s Influencing the Markets

Futures on Wall Street indicated a lower opening on Wednesday, following a record high for the S&P 500 in the previous session. Investors are gearing up to hear comments from Fed Governor Adriana Kugler, who is among several policymakers set to speak this week regarding the central bank’s recent significant interest rate cut.

1. Futures Decline

U.S. stock futures experienced a slight decrease after the S&P 500 notched a second consecutive record high in the prior session.

As of 03:26 ET, S&P 500 futures dropped by 12 points, or 0.2%. Dow futures saw a decrease of 96 points, also down by 0.2%, while Nasdaq 100 futures fell by 77 points, or 0.4%.

Despite the lower futures, major indices on Wall Street closed positively, reflecting gains in other global markets after China announced new stimulus measures aimed at boosting activity in its economy. U.S.-listed shares of Chinese companies surged, accompanied by gains in copper and lithium mining sectors driven by rising metal prices.

However, investor sentiment was dampened by a Conference Board report indicating an unexpected decline in U.S. consumer confidence in September, attributed to concerns over the labor market.

2. Fed’s Kugler to Address Markets

Federal Reserve Governor Adriana Kugler is scheduled to speak on Wednesday. Market participants are eager to see if she will share insights regarding last week’s significant interest rate reduction.

Kugler will present at the Harvard Kennedy School at 16:00 ET, according to the Fed’s announcements. Additional Fed officials, including Chair Jerome Powell, are also expected to make public statements this week.

On Tuesday, Fed Governor Michelle Bowman defended her opposition to the 50-basis point rate cut, advocating for a more traditional quarter-percentage point reduction, citing that major inflation metrics remain “uncomfortably above” the Fed’s target.

Her viewpoint diverged from others in the Fed, who argued that a larger cut was necessary as high rates were exerting excessive pressure on the economy amid signals that inflation is easing and labor demand is weakening.

3. Investigation into SAP and Carahsoft

The U.S. government is investigating German software company SAP and product reseller Carahsoft for potentially overcharging government agencies for over a decade, as reported.

The Department of Justice is examining whether SAP colluded with Carahsoft to artificially inflate prices for sales to U.S. military and other government entities. This inquiry, which has been active since at least 2022, included an FBI raid on Carahsoft’s Virginia offices on Tuesday.

4. Gold Reaches New Heights

Gold prices dipped slightly after reaching a new record high on Wednesday.

As of 03:28 ET, spot gold was down by 0.1%, priced at $2,654.31 per ounce, after previously hitting a peak of $2,670.43 per ounce during Asian trading hours.

The anticipation of lower interest rates has provided key support for gold, making it more attractive as a non-yielding asset. Additionally, demand for gold as a safe-haven investment has been bolstered by increased geopolitical tensions in the Middle East. Insights from the Fed and the upcoming release of the Fed’s preferred inflation measure could further steer expectations regarding interest rates.

5. Oil Prices Slip

Crude oil prices fell on Wednesday as traders reassessed the likely effects of new monetary stimulus from China.

By 03:30 ET, the Brent contract dropped 0.5% to $74.08 per barrel, while U.S. crude futures dipped 0.7% to $71.08 per barrel.

Both benchmarks saw a nearly 2% rise on Tuesday following China’s announcement of stimulus measures. However, traders observed that further actions may be needed to enhance the economic outlook for the world’s largest crude importer. Nevertheless, a decline in U.S. crude oil inventories provided some market support, following data showing a drop of 4.34 million barrels last week. Official data from the Energy Information Administration is expected later in the day.