Foot Locker Inc. plunged 30% in premarket trade after slashing its 2023 earnings forecast and suspending its dividend, and Peloton Interactive Inc. fell 21% after its 2023 revenue forecast failed expectations. S&P 500 contract prices increased by 0.2%, reversing earlier gains of up to 0.6%. Nvidia increased by 0.6%.
After traders reduced their expectations on interest rate hikes due to evidence of a quickening slowdown in the euro area, stocks in Europe gave up some of their gains. The euro sank after the region’s PMI report, as Europe spearheaded a rise in global bonds.
Ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Policy Symposium on Friday, larger markets are also buying time. Investors have positioned for the Fed to keep borrowing costs high due to the US economy’s resilience. Treasury yields decreased on Wednesday as a result of events in Europe.
According to analysts, Nvidia’s second-quarter revenue may surpass the projection it made three months prior. The options market is also anticipating a 10% move after the results.
According to Ulrich Urbahn, head of multi-asset strategy and research at Berenberg, “the market is waiting and watching for the main triggers this week: Nvidia results and Jackson Hole. Investors should pay close attention to the Jackson Hole summit given the significant yield hike since July.
After the Fed increased interest rates last month to a range of 5.25% to 5.5%, the highest level in 22 years, investors are seeking for hints on the outlook for rates. Before Powell’s statements on Friday, the US PMI statistics for August activity, which are due later on Wednesday, will give information on the health of the economy.
According to Stephen Auth, chief investment officer for stocks at Federated Hermes, “one concern for the Fed as it comes so close to its inflation target is that the bond market gets ahead of it and re-stimulates the economy with a huge drop down in yields.
Although Powell is unlikely to “surrender the hard-won credibility of the past year with a premature shift back to policy looseness,” it will be challenging for him to come across as excessively hawkish, according to Auth. This is because inflation is clearly on the slide and deflationary pressures are approaching from China.
Despite new indications of an earnings revival among the nation’s IT heavyweights, mainland Chinese stocks were once again under pressure in Asia.
Ahead of the official US stockpile data that is anticipated later on Wednesday, oil prices fell for a third day elsewhere.