Dow Futures Gain, Dollar Slips Lower Ahead of Fed Rate Meeting; August Retail Sales Disappoint

Wall Street looks to extend its recent winning streak to a fourth consecutive session Wednesday, but caution keeps a lid on gains ahead of the Fed's September policy statement at 2:00 pm Eastern time.

The Wednesday Market Minute

  • Global stocks grind higher, U.S. dollar weakens ahead of the Federal Reserve's September policy statement at 2:00 pm Eastern time.
  • Fed Chairman Powell is likely to acknowledge U.S. economic improvement, but remain cautious in new growth projections under his new strategy of average inflation targeting.
  • Oil extends gains as Hurricane Sally shutters more than a quarter of U.S. Gulf output as it bears down on the Alabama and Mississippi coastlines.
  • U.S. equity futures suggest a fourth day of gains on Wall Street even after weaker-than-expected August retail sales data at 8:30 am Eastern time. 

U.S. equity futures suggest Wall Street is on pace for its fourth consecutive gain Wednesday even as market express caution ahead of the Federal Reserve's September policy meeting as well as a key reading of consumer strength before the start of trading.

August retail sales rose just 0.6% from last year, the Commerce Department said, a figure that was lower than the downwardly-revised July tally of 0.9% and fell well shy of the Street consensus forecast of a 1.1% gain. Stripping away car sales, retail sales rose 0.7%, just shy of the 0.8% forecast. 

The Fed wraps-ups it two day policy meeting with a statement today at 2:00 pm Eastern time from Washington, with analysts looking for fresh growth projections under the Chairman Jerome Powell's newly-revealed strategy of average inflation targeting.

The statement is also expected to acknowledge improvements in employment, wages and industrial activity.

That, alongside this week's bullish sentiment towards a near-term coronavirus vaccine and the potential for further fiscal support from Congress, should be more than enough to keep Wall Street's recent rally on track following last night's modest gains.

Futures contracts tied to the Dow Jones Industrial Average, which is down 1.5% for the month, are priced for a 107 point opening bell gain while those linked to the S&P 500, which is up 5.3% for the year, are indicating a 13 point advance. 

FedEx Corp.  (FDX) - Get Report shares were a notable pre-market mover, surging 9.1% to $258.25 each after the global package delivery group posted stronger-than-expected first quarter earnings after the close of trading last night. 

Nasdaq Composite futures, meanwhile, suggest a 40 point  move to the upside thanks in part to gains for Apple  (AAPL) - Get Report, which continues to grind higher following its product launch event in California yesterday.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.26% lower at 92.89 following the retail sales data, while benchmark 10-year Treasury note yields slipped to 0.659%.

Global oil prices were also on the rise, lifting U.S. crude prices more than 2% over the past two days and closer to the $40 per barrel mark, as Hurricane Sally bears down on the Alabama and Mississippi coastlines with near 100 mile per hour winds, shuttering nearly a quarter of all Gulf region output.

WTI contracts for October delivery, the U.S. benchmark, traded 89 cents higher from their Tuesday close in New York at $39.17 per barrel in early European dealing while Brent contracts for November, the new global benchmark, were seen 83 cents higher at $41.36 per barrel.

Overnight in Asia, last night's petered-out rally on Wall Street kept a lid on gains for the Nikkei 225 in Tokyo, which was little-changed on the session at 23,457.53 points as the yen climbed to a near two-month high of 104.86 against the dollar heading into today's Fed meeting.

The region-wide MSCI ex-Japan benchmark, meanwhile was marked 0.57% higher heading into the close of trading, helping the MSCI World index rise 0.5% to 575.64 points and pushing Europe to early opening bell gains.

The Stoxx 600 benchmark added 0.53% in Frankfurt even as the euro held firm at 1.1878 against the modestly weaker greenback, while grim readings for inflation -- which followed a big jump in the unemployment rate yesterday -- capped gains for the FTSE 100 in London, which marked 0.18% higher at 6,116.81 points.