Stock Futures Rise as Trump to Lay Out Details of Tax Reform, Durable Goods Jump
Stock futures were higher on Wednesday, Sept. 27, as investors awaited clarity on tax reform from the Trump administration.
Dow Jones Industrial Average futures were up 0.09%, S&P 500 futures rose 0.17%, and Nasdaq futures gained 0.22%.
President Donald Trump will lay out "new details" in a speech on Wednesday afternoon. The Big Six -- a group of officials from the White House and Capitol Hill -- will likely scrap a previous plan to cut the corporate tax rate to 15% and instead aim for a rate of 20% to 35%. Trump was pushing for a 15% tax rate as late as Sunday. The lawmakers are also pushing for a top individual tax rate of 35%.
The Big Six group includes Treasury Secretary Steven Mnuchin, House Speaker Paul Ryan, and Senate Majority Leader Mitch McConnell. Commerce Secretary Wilbur Ross told CNBC on Tuesday that if done right, tax reform could bump up U.S. GDP by 1%, creating "$10 trillion more GDP, $3 trillion more revenues to the federal government" over the next 10 years or so.
Durable goods orders in the U.S. rose in August, largely thanks to a big increase in aircraft bookings. Orders for long-lasting U.S.-made goods increased 1.7% last month, according to the Census Bureau. Economists had expected a 1.0% increase. Excluding transportation, durable goods orders increased 0.2%. Core capital goods orders rose by 0.9%.
Also on the economic calendar Wednesday, pending home sales index for August mid-morning.
Markets traded nervously on Tuesday, Sept. 26, as Federal Reserve Chair Janet Yellen kept markets guessing on a December interest rate hike. On the dovish side, Yellen said the Fed may have made an error in assessing the labor market and inflation trends, meaning easy monetary policy may be the right move in the near-term. But Yellen also reiterated her belief that soft inflation was "probably temporary" and that inflation would reach the Fed's 2% target in the next few years. Yellen also cautioned against moving too gradually, noting the risk that the labor market could overheat.
The chances of a 25-basis-point rate hike at the December meeting sit at 76.4%, according to CME Group fed funds futures. Another rate hike would put the federal funds rate at 1.25% to 1.5%.
Crude oil prices were slightly higher ahead of a weekly reading on U.S. stockpiles to be released Wednesday. The past several weeks have shown a large increase in stockpiles as Hurricane Harvey crippled refinery production in the Texas and Louisiana region.
West Texas Intermediate crude was up 0.1% to $51.94 a barrel on Wednesday.
Nike Inc. (NKE) - Get Report fell in premarket trading on Wednesday after the athletic apparel and sneaker company reported fiscal first-quarter earnings that topped Wall Street forecasts but revenue came up short. Nike earned 57 cents a share in the quarter, higher than analysts' expectations of 48 cents. Revenue of $9.07 billion was up from last year's $9.06 billion but lower than Wall Street's estimates for $9.09 billion.
On a call with analysts, Nike CEO Mark Parker said revenue in the quarter was driven by Air Max sneakers and that new products under that collection will be released "soon." Gross margins fell 180 basis points in the first quarter due, in part, to "a higher mix of off-price sales," Nike said.
Shares of Micron Technology Inc. (MU) - Get Report rose sharply in premarket trading after the chipmaker reported better-than-expected fiscal fourth-quarter earnings and its outlook for the fiscal first quarter topped expectations. Micron estimated first-quarter revenue of $6.1 billion to $6.5 billion, higher than expectations of $6 billion. The company said earnings should come in at $2.09 and $2.23 a share, above forecasts of $1.82.
Hormel Foods Corp. (HRL) - Get Report was on watch after a series of C-suite changes. The packaged foods company, which owns Spam and peanut butter brand Skippy, announced that Chairman Jeffrey Ettinger would retire, closing the chapter on almost 11 years in the positions. CEO Jim Snee will resume the position of chairman, effective Nov. 20. Snee has acted as CEO since October 2016.
Updated from 7:46 a.m. ET, Wednesday, Sept. 27.
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