By Peter Nurse
Investing.com — U.S. stocks are seen opening lower Wednesday, handing back some of the week’s gains in muted trading ahead of key inflation data which could guide future Federal Reserve monetary policy.
At 7 AM ET (1100 GMT), the Dow Futures contract was down 130 points, or 0.4%, S&P 500 Futures traded 14 points, or 0.4% lower, and Nasdaq 100 Futures dropped 23 points, or 0.2%.
The main indices on Wall Street closed higher Tuesday for the second day this week, with the blue-chip Dow Jones Industrial Average gaining over 260 points, or 0.8%, while the broad-based S&P 500 and the tech-heavy Nasdaq Composite closed 0.9% higher.
These gains occurred despite big-box retailer Target (NYSE:TGT) cutting its profit guidance, highlighting the risks to economic growth from the current high levels of inflation and the associated moves by the Federal Reserve to combat this.
Treasury Secretary Janet Yellen told the Senate Finance Committee on Tuesday she expects inflation to remain high. Yellen testifies again later Wednesday, but the main focus is on Friday’s CPI report for May, amid expectations that it could provide clues on the future path of interest rates after the hikes next week and in July.
The OECD cut its growth forecasts in its latest Economic Outlook, published earlier Wednesday, while lifting its inflation forecasts, citing Russia’s invasion of Ukraine and the West’s response to it.
The Paris-based group now sees global growth of 3% this year, much less than the 4.5% it expected in December, while inflation is expected to peak at 8.5% this year, above the previously forecast high of 5%.
The World Bank had earlier cut its forecast for global growth this year to 2.9%.
In corporate news, Novavax (NASDAQ:NVAX) stock is seen surging premarket after the drugmaker’s two-dose COVID-19 vaccine took a huge step toward regulatory authorization in the U.S., with the Food and Drug Administration panel voting overwhelmingly that its benefits outweigh its risk.
Earnings from the likes of spirits maker Brown-Forman (NYSE:BFb), owner of the Jack Daniels and Finlandia brands, food maker Campbell Soup (NYSE:CPB) and discount store Five Below (NASDAQ:FIVE) are scheduled for release in the session.
Oil prices climbed Wednesday, maintaining the recent upward momentum as the U.S. summer driving season kicks into gear and China emerges from virus lockdowns.
The United Arab Emirates Energy Minister Suhail Al Mazroui warned that the global supply-demand balance threatened to worsen considerably, pushing prices higher still as demand in China rebounds.
Official data from the U.S. Energy Information Administration is due at 10:30 AM ET (1430 GMT), after industry body, the American Petroleum Institute, on Tuesday reported a surprise build of 1.8 million barrels for last week.
By 7 AM ET, U.S. crude futures traded 1.1% higher at $120.72 a barrel, after reaching its highest settlement since March 8 on Tuesday. The Brent contract rose 1% to $121.73, after closing at the highest since May 31.
Additionally, gold futures fell 0.1% to $1,849.90/oz, while EUR/USD traded 0.2% higher at 1.0722.