Futures flat ahead of economic data, Powell remarks

On September 26, 2023, traders on the floor of the New York Stock Exchange (NYSE) experienced a mixed day of trading. Some stocks declined while others rose, reflecting the uncertain market conditions.

One notable decline was seen in Micron Technology (MU.O), which slid after issuing a dour Q1 forecast. The technology company predicted a bigger-than-expected loss for the quarter, causing investors to sell off the stock. Micron Technology’s shares dropped 4.1% as a result.

Another company that experienced a decline was Workday (WDAY.O), a provider of human resources software. The company’s subscription revenue outlook was cut, leading to a 10.0% dip in its stock price. Investors were disappointed by the lowered growth expectations for the next three years.

On the other hand, GameStop (GME.N) saw a rise in its stock price after announcing Ryan Cohen as its new CEO and chairman. Cohen, a billionaire activist investor, has been seen as a potential catalyst for change at the struggling video game retailer. This announcement led to a 7.2% increase in GameStop’s shares.

Overall, the futures market was relatively muted on September 28, with investors awaiting key economic data and remarks from Federal Reserve Chair Jerome Powell. Higher crude oil prices added to concerns about inflation and the impact on monetary policy. The 10-year Treasury yield remained at a 16-year high, causing megacap growth stocks like Apple (AAPL.O), Microsoft (MSFT.O), Amazon.com (AMZN.O), and Tesla (TSLA.O) to decline in premarket trading.

Investors were particularly interested in the final gross domestic product (GDP) estimate for the second quarter and weekly jobless claims data to gauge the strength of the U.S. economy and labor market. Powell’s speech, along with remarks from other Federal Reserve voting members, added to the market’s anticipation.

The soaring energy prices and concerns about tight oil supplies further fueled worries about inflation and the possibility of higher interest rates. The market feared that interest rates would stay higher for longer, as businesses and consumers would face challenges due to rising oil prices.

In addition to these market factors, traders also monitored the ongoing debate over a short-term spending measure in Congress to avoid a partial government shutdown. The Senate’s procedural vote on the measure would be closely watched, as a shutdown would have significant implications for the market.

On a sector level, energy stocks were set to emerge as the only major gainers for the month, fueled by higher crude oil prices. In contrast, rate-sensitive sectors like information technology and real estate were expected to be the worst hit. The S&P 500 and Nasdaq were on track for their worst monthly performance of the year, with concerns about rising Treasury yields and uncertainty surrounding interest rates.

Overall, traders were navigating a volatile market with various factors impacting stock prices. Uncertainty about inflation, interest rates, and government spending added to the challenges faced by market participants. As they awaited key economic data and Powell’s remarks, traders sought to position themselves strategically in response to these market uncertainties.