US pre-open: Stocks seen muted as investors eye Fed announcement
US stocks looked set for a muted open on Monday as investors eyed the latest policy announcement from the Federal Reserve this week amid expectations of a 25 basis points rate hike.
At 1220 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.1%, while Nasdaq futures were flat. On Friday, stocks on Wall Street closed at their lowest level since April following the release of weak Chinese industrial production and retail sales data for November.
Oanda analyst Craig Erlam said: "The Fed decision on Wednesday is another event that could shake things up in the markets. The central bank has been a key source of volatility in the markets since the beginning of October when Powell’s comments triggered a minor panic and correction in stocks. Since then there’s been plenty of speculation about whether the Fed will pare back its expectations for next year, or even hike this week which was almost entirely priced in, so Wednesday will certainly be interesting.
"The most recent comments from Powell, combined with expectations of a slowdown next year and financial market instability look the perfect recipe for a downgrade to expectations, so naturally there’ll be huge scrutiny on the dot plot. With markets pricing in almost a 50 50 chance of one rate hike by December, the market has fallen well behind what the Fed has previously alluded to, leaving a huge divide that needs bridging."
Meanwhile, Sino-US trade relations were in focus again after the US reportedly said that China’s "unfair competitive practices" were harming foreign companies and workers in a way that violates World Trade Organization rules.
According to Reuters, US trade ambassador Dennis Shea was criticised by Chinese envoy Zhang Xiangchen, who said the Trump administration’s tariffs on steel and aluminum products allowed protectionism under the guise of dubious national security concerns.
In texts seen by Reuters, the conversation was had at the start of a closed-door review of US trade policies, held every two years at the WTO.
In corporate news, WellCare shares could be active after the company, which provides government-sponsored managed care services, gave a weaker-than-expected profit outlook for 2019. It said it expects adjusted earnings per share to come in at between $13.15 and $13.40, versus expectations of $25.69.
Elsewhere, fast food restaurant chain Jack in the Box was likely to be in focus as the company said it was exploring a range of strategic and financing alternatives to maximise shareholder value. It said potential alternatives could include, among other things, a sale of the company or executing on the company’s previously announced plans to increase its leverage.
On the data front, the NY Empire State manufacturing index for December is at 1330 GMT, while the NAHB housing market index for December is at 1500 GMT.