Dow Futures Down 40 Pts; Caution Ahead of Fed Minutes

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Dow Futures Down 40 Pts; Caution Ahead of Fed Minutes

By Peter Nurse -- U.S. stocks are seen opening marginally lower Wednesday, amid a degree of caution ahead of the release of the minutes from the latest Federal Reserve meeting, with investors fretting about a potential economic slowdown.

At 7 AM ET (1100 GMT), the Dow Futures contract was down 40 points or 0.1%, S&P 500 Futures traded 5 points or 0.1% lower, and Nasdaq 100 Futures dropped 20 points or 0.2%.

Aggressive monetary tightening by the U.S. central bank to combat rampant inflation has caused investors to worry about the possibility of the country’s economic growth slowing dramatically.

This was illustrated by the yield on the benchmark 10-year U.S. Treasury yield falling below the 2-year yield overnight, a yield curve inversion that historically has been a warning sign of upcoming recession.

The Federal Reserve will release the minutes of its June policy meeting at 2 PM ET (1800 GMT), the gathering that saw the central bank lift interest rates by 75 basis points, the largest increase since 1994.

Investors will be parsing through the release for clues of the policymakers' thinking about rate hikes in the future and whether the Fed would back off if signs of inflation decelerating emerge in the data.

Ahead of this, investors will also study the ISM business activity reading for June and the government's report on job openings in May, both due at 10 AM ET, in order to gauge the health of the American economy.

In the corporate sector, Amazon (NASDAQ: AMZN ) announced a partnership with Just Eat Takeaway (AS: TKWY ), which will see it take a 2% stake in the online delivery service’s Grubhub unit. The prospect of having to compete with the deep-pocketed e-commerce giant hit Uber (NYSE: UBER ) and DoorDash (NYSE: DASH ) in premarket, Uber stock falling 1.8% and DoorDash falling 5.2%.

Oil prices traded higher Wednesday, bouncing back from the previous session’s rout with the focus on supply tightness.

The secretary general of oil producers group OPEC, Mohammad Barkindo, died late Tuesday, just hours after he stated that the industry faces some problems in producing the necessary output to cope with surging demand due to years of underinvestment.

Weekly crude inventory data from the industry body American Petroleum Institute will be published later in the session, after being delayed by Monday’s holiday.

By 7 AM ET, U.S. crude futures traded 0.3% higher at $99.78 a barrel, after closing below $100 for the first time since late April, while the Brent contract rose 0.9% to $103.67, after plunging 9.5% on Tuesday, the biggest daily drop since March.

Additionally, gold futures fell 0.3% to $1,759.15/oz, while EUR/USD traded 0.7% lower at 1.0193.

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