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U.S. stock index futures showed a slight rebound on Wednesday, following a weak session on Tuesday. Investors were evaluating more corporate earnings while absorbing weaker-than-expected economic data that has raised concerns over the U.S. economy.
At 05:45 ET (09:45 GMT), Dow Jones Futures were up by 145 points, or 0.3%, S&P 500 Futures gained 15 points, or 0.2%, and Nasdaq 100 Futures rose by 17 points, or 0.1%.
Economic Weakness Weighs on Market Sentiment
The previous session saw significant declines, with the broad-based S&P 500 posting its fifth loss in the last six days and the Dow Jones suffering its sixth negative session out of the past seven. The primary concern for investors remains the U.S. economy’s health, particularly after Friday’s disappointing jobs report.
Adding to market jitters, the Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index unexpectedly fell to 50.1 in July from 50.8 in June. This data was particularly troubling because the services sector, which accounts for approximately 80% of U.S. economic activity, showed signs of stagnation. Additionally, the index for input costs surged to its highest level in almost three years, prompting fears that the U.S. may be entering a phase of “stagflation” — a scenario where growth is slow, and inflation remains high.
As a result of this economic weakness, market participants are increasingly betting on a potential rate cut by the Federal Reserve at its September meeting, especially after last week’s weak payrolls data and comments from San Francisco Fed President Mary Daly suggesting openness to a rate cut.
Focus on Fed Officials’ Comments
While there is limited top-tier economic data expected on Wednesday, investors will be keenly watching comments from several Federal Reserve members, including Susan Collins, Lisa Cook, and Mary Daly. Their remarks could offer valuable clues about the Fed’s stance on interest rates in the coming months.
Disappointing Earnings from Major Companies
Despite broader economic concerns, earnings reports for the second quarter have generally exceeded expectations, with more than 80% of firms reporting better-than-expected results. However, some key companies still to report include McDonald’s (NYSE:MCD) and Walt Disney (NYSE:DIS).
Shares of Advanced Micro Devices (NASDAQ:AMD) fell sharply in premarket trading after the chipmaker reported disappointing quarterly revenue from its crucial data center business. AMD’s results came in stark contrast to AI leader Nvidia (NASDAQ:NVDA), further raising concerns among investors.
Shares of Snap (NYSE:SNAP) also plummeted as the social media company posted a weak quarter, struggling to keep pace with AI-driven competitors.
Rivian Automotive (NASDAQ:RIVN) also saw a premarket decline following a larger-than-expected loss in the second quarter, impacted by trade-related supply chain disruptions.
Oil Prices Rebound Amid Tariff Uncertainty
On the commodities front, oil prices rose on Wednesday, recovering from the previous session’s five-week low. Oil prices were buoyed by expectations of tighter U.S. sanctions on buyers of Russian oil and a drawdown in U.S. oil inventories.
At 05:45 ET, Brent futures rose 1.5% to $68.63 per barrel, and U.S. West Texas Intermediate (WTI) crude futures gained 1.5% to $66.16 per barrel.
Oil had fallen by more than $1 on Tuesday, marking its lowest point in five weeks due to concerns about oversupply following OPEC+’s decision to hike output by 547,000 barrels per day in September. However, the market found some support as Trump reiterated his threats of increasing trade tariffs against India over its continued purchases of Russian oil.
Furthermore, API data showed a larger-than-expected draw in U.S. oil inventories, with a 4.2 million-barrel decrease versus expectations for a 1.8 million-barrel draw. This data helped shore up oil prices.
Conclusion
While U.S. stock futures showed some recovery on Wednesday, investor sentiment remains fragile due to concerns about economic weakness and the ongoing volatility surrounding trade policies. The Fed’s actions, corporate earnings reports, and developments in the oil markets will be key factors influencing market movements in the coming days.
