U.S. Futures Largely Flat; Fed Starts Meeting, PPI Data Due

© Reuters.

By Peter Nurse

AiVIF.com -- U.S. stocks are seen opening largely unchanged Tuesday, remaining near record levels, ahead of the start of the latest two-day Federal Reserve meeting. 

At 7:05 AM ET (1205 GMT), the Dow futures contract was down 20 points, or 0.1%, while S&P 500 futures traded 1 points, or less than 0.1%, higher, and Nasdaq 100 futures climbed 5 points, or less than 0.1%.

The broad-based S&P 500 and the tech-heavy Nasdaq Composite closed at fresh record highs Monday, gaining 0.2% and 0.7% respectively, while the blue-chip Dow Jones Industrial Average dropped 0.3%.

The Federal Reserve’s two-day policy meeting starts later Tuesday, and while the central bank is not expected to take any action this time round it could hint at its future tapering plans given the recent surge in consumer prices.

Also due for release Tuesday is the producer price index for May, a particularly relevant number given the focus upon inflation. Year-over-year, the PPI is expected to have spiked by 6.3%, the largest increase since the agency started tracking the data in 2010. It had jumped 6.2% on a yearly basis in April. 

JPMorgan Chase (NYSE:JPM) has been “effectively stockpiling” cash, the bank’s CEO Jamie Dimon said Monday during a conference, rather than using it to buy Treasuries or other investments because of the possibility higher inflation will force the Fed to boost interest rates.

Retail sales in May are expected to dip 0.7% for the month after being flat previously, while industrial production is seen rising 0.6% on the month, and will be closely watched amid issues over supply constraints and labor market shortages. 

In corporate news, Boeing (NYSE:BA), as well as Airbus (PA:AIR), is likely to be in the spotlight with the European Union and the United States on the verge of announcing a truce in their 17-year conflict over aircraft subsidies.

Biogen (NASDAQ:BIIB) will also be in focus after the drug maker’s study testing a treatment for a rare eye disease failed to meet its target, while tech company Oracle (NYSE:ORCL) is set to release its quarterly results in what is a generally quiet week for earnings.

Crude oil prices headed higher Tuesday, remaining near multi-year highs, as the immediate threat of additional supply from Iran returning to the market dwindled.

By 7:05 AM ET, U.S. crude was up 0.5% at $71.23 a barrel, not far below the highest level since October 2018, while Brent was up 0.5% at $73.21, around its highest since May 2019. 

Crude markets have posted gains of over 40% this year to date, even while ongoing discussions between Iran and world powers, including the U.S., to revive a 2015 nuclear deal take place. A successful conclusion could allow the Persian Gulf country to resume crude exports, potentially adding up to two million barrels of crude a day to the global market.

However, such a deal is looking unlikely before Friday’s Iranian presidential elections. The front-runner is Ebrahim Raisi, an implacable critic of the West who was sanctioned by the United States in 2019 for human rights violations.

Elsewhere, gold futures was largely flat at $1,866.05/oz, while EUR/USD traded 0.1% higher at 1.2125.