Stock Futures Set Up for Another Decline as Crude Tumbles, Trade Gap Widens
Stock futures were setting up Wall Street for another slide on Wednesday as Brexit fears pulled crude oil lower.
S&P 500 futures were down 0.64%, Dow Jones Industrial Average futures fell 0.61%, and Nasdaq futures declined 0.7%.
Crude oil hit a two-month low on Wednesday as fears over how the United Kingdom's exit from the European Union will impact the global economy and demand for the commodity. Worries over the Brexit also pushed the pound to a 31-year low against the U.S. dollar, making foreign purchases of U.S.-produced oil more expensive.
West Texas Intermediate crude oil was down 1.3% to $46.01 a barrel on Wednesday. The British pound fell 0.33% against the U.S. dollar, trading at $1.29.
Gold prices were on a tear on Wednesday morning as investors sought safe-haven assets amid the uncertainty of the Brexit situation. Prices hit their highest in 28 months with spot gold trading around $1,371.40 an ounce.
Brexit fears returned in force on Tuesday after the Bank of England attempted to reassure investors that it had enough liquidity to ride out any outcome. Bank of England Gov. Mark Carney said that the central bank has the scope to deal with Article 50, which will kick off Britain's exit, when it is invoked.
The U.S. trade gap in May widened on healthy demand for imports such as electronics and home goods. The trade deficit expanded to a three-month high of $41.1 billion in May from $37.4 billion in April. Economists had expected a reading of $42.2 billion.
The Federal Reserve will release the minutes from its June meeting on Wednesday afternoon. Several members turned more dovish in the face of global economic uncertainty during the meeting. The number of Fed officials who expect to see just one rate hike this year rose to six members in June, up from just one official in its previous April meeting.
"The dynamics underpinning Fed policy have been overtaken by the post-Brexit events, making the June FOMC minutes somewhat stale," said James Rossiter, vice president and senior global strategist at TD Securities. "Nevertheless, we expect the tone to be dovish, reflecting a greater awareness among Fed officials about the negative feedback loop from global events."
Walgreens Boots Alliance (WBA) - Get Report topped third-quarter estimates and bumped up the low-end of its full-year earnings forecast. The convenience and drugstore chain earned an adjusted $1.18 a share in the quarter, 4 cents above estimates. The company anticipates full-year earnings of at least $4.45 a share, a dime higher than its previous low-end target. Its acquisition of Rite Aid is expected to close in the second half of the year.
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Medivation's (MDVN) board of directors officially rejected a bid from Sanofi (SNY) - Get Report on Tuesday, but did enter a confidentiality pact with the French drugmaker as part of exploring a sale to other bidders. Pfizer reportedly has expressed interest in purchasing the biotech company.