FOX Business: The Power to Prosper
U.S. stock-index futures climbed mildly on Wednesday as traders awaited several key pieces of economic data and a policy decision from the Federal Reserve.
As of 8:20 a.m. ET, Dow Jones Industrial Average futures climbed 42 points to 12991, S&P 500 futures gained 4 points to 1379 and Nasdaq 100 futures rose 13 points to 2650.
Wall Street has struggled to define a direction after last week’s surge as traders take caution with a bounty of important news on tap.
The Federal Reserve is set to make its monetary policy statement at roughly 2:15 p.m. ET. Economists broadly expect the central bank to hold off on any new stimulus measures. However, the Fed is being confronted with fairly bleak economic indicators, including a labor market and economic growth that have hit stall speed.
Interest rates are already at historically low levels and the central bank has embarked on a second round of Operation Twist, in which it is lengthening the maturity, but not the size, of its balance sheet. Still, another round of quantitative easing, in which the Fed could buy certain assets, seems out of the question for now.
“Since the June meeting, economic conditions have deteriorated further and now warrant additional monetary easing,” analysts at Nomura wrote in a note to clients. “However, we expect the FOMC to defer taking action until” the September meeting.
Perhaps more closely eyed is the European Central Bank decision due on Thursday. ECB President Mario Draghi has postured that the central bank is prepared to do what it takes to quell the eurozone debt crisis that is afflicting the bloc’s economy, but it hasn’t taken any decisive action yet. Potentially, the ECB could chop down interest rates, introduce new lending programs, buy-up various types of assets or take other alternative measures, analysts have said.
In a sign of worsening conditions in Europe, the manufacturing sector in the eurozone contracted even more quickly in July than it did the month before, according to reports released on Wednesday. The eurozone PMI gauge fell from 45.1 from 44, marking the eleventh contraction in a row. Germany, the bloc’s biggest economy, shrunk at the fastest pace in three years.
China’s official PMI for July showed the country’s manufacturing expansion essentially stalled out in July. A private survey from HSBC suggested the manufacturing sector in the world’s No. 2 economy still deteriorated, but at a slower rate in July from the month before.
The report “confirmed only a modest improvement of manufacturing conditions thanks to the initial effect of the earlier easing measures,” the bank’s chief economist for China Hongbin Qu wrote in a report. “But this is far from inspiring, as China’s growth slowdown has not been reversed meaningfully and downside pressures persist with external markets continuing to deteriorate.”
There are a slew of U.S. economic reports on tap on the day as well. The private sector added 163,000 jobs in July, according payroll processor ADP. Analysts had been expecting an increase of 120,000. The June increase was, however, revised down to 172,000 from 176,000.
This report comes ahead of the important monthly employment report from the Labor Department on Friday. Recent data have shown the jobs market failing to pick up steam quickly enough to materially drive down the unemployment rate.
Later in the morning, the Institute for Supply Management publishes its U.S. PMI gauge. The manufacturing sector in the world’s biggest economy is expected to have revved up back into a mild expansion in July from a slight contraction the month before. Data from the Commerce Department due out at the same time are expected to show construction spending having risen 0.4% on a month-to-month basis in June.
Oil prices were modestly to the upside. The benchmark crude oil contract traded in New York rose 52 cents, or 0.58%, to $88.57 a barrel. Wholesale New York Harbor gasoline jumped 1.3% to $2.81 a gallon.
In metals, gold edged up by $2.10, or 0.14%, to $1,617.
The Euro Stoxx 50 slipped 0.01% to 2326, the English FTSE 100 rose 0.83% to 5682 and the German DAX dipped 0.25% to 6755.
In Asia, the Japanese Nikkei 225 slumped 0.61% to 8642 and the Chinese Hang Seng ticked up 0.12% to 19820.