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Dow Futures Lower On Boeing Loss; Fed Decision, Apple Earnings In Focus

A key inflation benchmark is trading at 8-year highs ahead of today's Fed rate decision, with bond yields moving north amid another round of big tech earnings highlighted by Apple and Facebook after the close.

The Wednesday Market Minute

  • Global stocks grind higher ahead of today's Fed policy meeting, with investors focused on big tech earnings, rising bond yields and faster inflation signals.
  • Google roars past Street forecasts with a record bottom line and revenues of $55 billion, while Microsoft slumps after a solid March quarter flattered by one-off items.
  • President Joe Biden will address a joint session of Congress later today and outline his tax and spending plans that are likely to include a capital gains rate near 40%.
  • Benchmark 10-year note yields jump to 1.647% in overnight trading ahead of today's Fed meeting, while 10-year TIPS yields touch a 2013 high of 2.41% as inflation bets accelerate.
  • CDC data shows 96.7 million Americans have now been fully vaccinated against the coronavirus, with around 2324 million doses administered as of Monday.
  • U.S. equity futures suggest a modestly weaker open on Wall Street ahead of earnings from Boeing, Humana and Discovery, the Fed's interest rate decision at 2:00 PM Eastern time and after-the-bell-earnings from Apple, Facebook, Qualcomm and Ford.

U.S. equity futures edged lower Wednesday ahead of another crucial day for global markets highlight by the Federal Reserve's interest rate decision later today as well as March quarter earnings from Boeing  (BA) - Get Boeing Company Report, Apple AAPL and Facebook  (FB) - Get Facebook, Inc. Class A Report.

Big tech earnings have dominated market headlines this week, with Google parent Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report blasting expectations last night with a bottom line of $17.9 billion -- its second consecutive record -- on revenues of $55.3 billion and providing early support for the Nasdaq with a pre-market gain of around 4.24%

Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report shares were moving in the opposite direction, however, following a better-than-expected quarter that included earnings of $1.95 per share and revenues of $41.7 billion that were partly flattered by one-off gains from tax rates and currency benefits. Shares were last seen 2.2% lower at $256.30 each. 

Advanced Micro Devices  (AMD) - Get Advanced Micro Devices, Inc. Report were also active, rising 4.3% in pre-market trading to $88.85 each after beating first quarter earnings forecast and issuing a robust near-term revenue forecast powered in part by aggressive pricing for its data center and personal computer chips. 

Apple and Facebook will likely extend the FAANG-themed trend with their after-the-bell earnings later today, but investors will first need to navigate a complicated session colored by a puzzling leap in 10-year Treasury note yields, which touched a two-week high of 1.647% in overnight trading, rising inflation expectations and a heady commodity prices heading into today's Fed rate decision at 2:00 PM Eastern time.

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President Joe Biden will also address a joint session of Congress later today during which he is expected to detail infrastructure spending and tax increases that could see the rate on capital investments rise to around 40%. 

Fed Chairman Jerome Powell and his colleagues have vowed not to make any rate adjustments until there is "substantial further progress" in moving inflation towards the bank's 2% target, but investors are starting to prepare for its next move -- the tapering of its $120 billion a month in bond purchases -- as the economy kicks into its post-pandemic stride.

That's having a corresponding impact on stocks, particularly the interest-rate sensitive Nasdaq -- which hit a record high earlier this week -- as bond yields rise and inflation bets accelerate.

Futures contracts tied to the Nasdaq are priced for a 20 point pullback, despite the boost from both Google and AMD, with those tied to the S&P 500 indicating a modest 1 point bump at the start of trading. 

Dow futures, meanwhile, are looking at a 75 point decline following a wider-than-expected first quarter loss for Boeing that sent shares 1% lower in pre-marketing trading. 

Overnight in Asia, stocks were modestly higher across the board as investors kept a close eye on bond yields and a quietly-firming U.S. dollar ahead of today's Fed meeting, while stronger-than-expected earnings from Deutsche Bank  (DB) - Get Deutsche Bank AG Report -- the beaten-down bank's best since 2014 -- gave an early boost to shares in Europe before gains were pared and the Stoxx 600 was marked largely flat heading into mid-day trading.