Stocks on Wall Street fell on Wednesday, signaling another day of losses, as lingering inflation concerns increased uncertainty about the Federal Reserve’s stance on interest rates in the near future.
The S&P 500 (^GSPC) saw a drop of about 0.6%, while the Dow Jones Industrial Average (^DJI) saw a drop of about 0.4%, intensifying overall market losses. The tech-heavy Nasdaq Composite (^IXIC) also saw a significant decline of 0.9%.
WTI crude oil (CL=F) has been trading near its highest levels since November, briefly touching the $90 mark on Tuesday following commitments from Saudi Arabia and Russia to continue cutting production. This development reignited concerns about “persistent” inflation, creating downward pressure on stocks and causing a collective drop in the three major US indices during Tuesday’s trading session.
As the Federal Reserve’s September 20 meeting approaches, investors are actively debating whether these inflationary pressures will force policymakers to maintain higher interest rates for an extended period.
At the same time, discouraging economic data from Europe and China is fueling concerns about a possible erosion of demand, which could undermine the resilience demonstrated by the US economy so far. The sharp drop in German industrial orders during July has triggered speculation about the risk of stagflation.
Given this dynamic, market participants will closely monitor the latest PMI data for the US services sector in August, with a particular focus on inflation indicators. The ISM reading, which exceeded expectations at 54.5 versus the expected 52.5, marks the eighth consecutive month of high activity.
In earlier developments, the US trade deficit in July expanded less than expected, boosted by a 1.6% rise in exports after three straight months of declines, according to official figures. Additionally, the publication of the Federal Reserve’s latest Beige Book is on the horizon.
Stocks open on a weak note
Stocks began Wednesday’s trading session on a negative note, with oil prices hovering around their highest levels since November 2022.
At the opening bell, the S&P 500 (^GSPC), the Dow Jones Industrial Average (^DJI), and the tech-focused Nasdaq Composite (^IXIC) all posted declines of about 0.3%. At the same time, WTI crude oil (CL=F) remained near $87 per barrel, marking its highest closing level since November 2022.
Pre-market engines: Enbridge, Roku, Photronics, GitLab
Several stocks took center stage during the pre-market trading session:
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Enbridge (ENB): Shares of Canadian gas pipeline operator Enbridge fell as much as 7% after it announced a $9.4 billion deal to acquire three utilities from Dominion Energy Inc., with the goal of creating the largest natural gas supplier in North America. Dominion shares also suffered a drop.
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Roku (ROKU): Roku shares rose 12% after the company revealed plans to reduce its workforce by 10% as part of a restructuring effort aimed at curbing rising expenses on its streaming platform.
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Phototronics (PLAB): Semiconductor equipment supplier Photronics saw its shares decline after missing Wall Street targets for its fiscal third quarter.
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GitLab (GTLB): Software development platform GitLab beat analyst estimates in its quarterly earnings, leading to a more than 5% increase in its premarket trading.
Stock futures signal another day of losses
Wall Street stocks on Wednesday looked poised to extend the previous session’s losses, as downbeat German data and rising oil prices revived concerns about persistent inflation.
Futures for the Dow Jones Industrial Average (^DJI) fell 0.13% or 46 points, while those for the S&P 500 (^GSPC) decreased 0.19%. Nasdaq 100 futures also fell 0.28%.
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