Futures Steady, Fed’s Williams on Rates, Google Developments – Market Movers Explained

Investing.com – US futures are largely stable as traders reassess their outlook for the Federal Reserve’s potential interest-rate trajectory. Meanwhile, Google plans to contest a significant ruling from a US judge that requires the tech giant to open its Android operating system to competitors. Additionally, Chinese stocks have retraced early gains after the country’s state economic planner refrained from announcing anticipated fiscal stimulus measures.

1. Futures Steady

US stock futures remained close to unchanged on Tuesday, as investors reconsidered expectations surrounding potential interest rate cuts by the Federal Reserve ahead of forthcoming inflation data and corporate earnings reports.

As of 04:03 ET (08:03 GMT), Dow futures and S&P 500 futures were largely stable, while Nasdaq 100 futures recorded a slight increase of 13 points or 0.1%.

In the previous session, major averages on Wall Street declined as some traders retracted their bets on the Fed lowering borrowing costs in its next meeting in November, following a robust jobs report last week.

Markets are now anticipating a more traditional quarter-point rate reduction, rather than a second consecutive 50-basis point cut. The Fed’s current rate range of 4.75% to 5.00% has seen increased speculation that rates may remain unchanged.

US Treasury yields, which typically move inversely to prices, experienced an uptick, with the benchmark 10-year note climbing above 4% for the first time in two months.

2. Fed’s Williams on US Economy

John Williams, President of the New York Fed, stated that the Fed’s current policy is "well positioned" for a soft landing for the US economy. In a Tuesday interview, he indicated that the strong jobs report suggests rates are set at a level that supports ongoing economic strength and helps reduce inflation back to the central bank’s 2% target.

He defended the Fed’s substantial rate cut last month, asserting it allows for maintained restrictive borrowing costs while alleviating "significant" pressure off the economy. Williams noted that the latest projections indicate two quarter-point reductions at the Fed’s final meetings of 2024, maintaining this as a "very good base case." However, he emphasized that the Fed is not on a "preset course," echoing recent comments from Fed Chair Jerome Powell.

3. Google Mandated to Open Android

Google has been instructed by a US judge to alter its Android operating system to permit rival app marketplaces and payment options, posing a significant challenge against ongoing antitrust claims. The ruling prohibits Google from blocking alternative in-app payment methods for three years and requires the company to allow users to download competing Android app platforms. Additionally, it prevents Google from incentivizing device manufacturers to preinstall its app store.

This decision follows a successful antitrust lawsuit by Epic Games, which accused Google of stifling competition through its app store and payment system. Google intends to appeal the ruling, contending that these changes could lead to "unintended consequences" detrimental to consumers, developers, and device manufacturers. Following the announcement, shares of Google parent company Alphabet decreased by 2.5%.

4. Chinese Markets Retrace Gains

Chinese markets had a strong start on Tuesday, rising sharply after the Golden Week holiday. However, they faced disappointment as Beijing did not introduce new fiscal stimulus measures, limiting overall gains.

The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes experienced gains between 4% and 6%, after initially surging as high as 13%. The upward momentum was initially driven by various stimulus actions announced by Chinese officials before the holiday, including interest rate cuts and relaxed property market regulations, aimed at supporting the struggling economy to achieve an annual growth target of 5%.

On Tuesday, China’s state economic planner expressed continued confidence in reaching this goal but fell short of providing specific details regarding expected fiscal stimulus measures, which left investors wanting more.

5. Oil Prices Decline

Oil prices fell on Tuesday as traders secured profits following a strong rally driven by concerns over a potential conflict in the Middle East affecting supply from the region. Also influencing crude prices were muted responses to remarks from China’s state economic planner.

At 04:04 ET, the Brent contract fell 1.4% to $79.80 per barrel, while US crude futures (WTI) were down 1.5% at $76.00 per barrel. Both contracts had risen over 3% on Monday, reaching their highest levels since late August, furthering last week’s increase of 8%, the most significant weekly rise in over a year.

Additionally, analysts are anticipating the release of US crude oil inventory data from the American Petroleum Institute later in the session, with expectations of an increase of 1.9 million barrels.