Dow futures largely flat; Fed minutes to determine market direction

By Peter Nurse    

Investing.com -- U.S. stocks are seen opening largely unchanged Wednesday, after the previous session’s sharp selloff as investors await the release of the Federal Reserve’s latest minutes for more clues as to the central bank’s likely rate hiking plans.

At 07:00 ET (12:00 GMT), the Dow Futures contract was down just 4 points, S&P 500 Futures traded flat and Nasdaq 100 Futures gained 2 points. 

U.S. investors returned from the long weekend in a downbeat mood, as bleak outlooks from retail giants Walmart (NYSE:WMT) and Home Depot (NYSE:HD) added to fears that recent robust economic data would lead to inflation remaining elevated for longer than previously expected, prompting the Fed to continue to raise interest rates.

The blue chip Dow Jones Industrial Average fell almost 700 points, or 2.1%, on Tuesday, while the broad-based S&P 500 dropped 2% and the tech-heavy Nasdaq Composite slid 2.5%.

The stage is now set for the release of the minutes of the Fed's meeting from earlier this month, which will be studied carefully for more insight into how high policymakers think interest rates will have to go to tame inflation which has proved to be very sticky.

The market is widely expecting rates to rise another quarter of a percentage point at the Fed's March meeting. And many expect a similar-sized increase in May, and then potentially another hike in June.

In corporate news, the quarterly earnings season rolls on, with numbers due from the likes of chip maker Nvidia (NASDAQ:NVDA), the online auction site eBay (NASDAQ:EBAY) and the e-commerce company Etsy (NASDAQ:ETSY).

Additionally, Baidu (HK:9888) (NASDAQ:BIDU) will be in the spotlight after the Chinese search engine giant announced a new $5 billion stock buyback and forecast better times ahead in 2023.

Palo Alto Networks (NASDAQ:PANW) stock surged more than 9% premarket after the company delivered better-than-expected second-quarter results, while Toll Brothers (NYSE:TOL) stock gained 0.6% after the homebuilder beat quarterly expectations as demand in the housing market starts to recover.

Oil prices drifted lower Wednesday on concerns higher interest rates will hit economic activity in the U.S., the largest consumer in the world, and thus fuel demand.

U.S. crude inventory data from the American Petroleum Institute, a day later than usual after Monday’s holiday, are due later in the session, and are expected to show another build, exacerbating the demand worries. 

By 07:00 ET, U.S. crude futures traded 1.1% lower at $75.54 a barrel, while the Brent contract fell 1% to $82.21. 

Additionally, gold futures traded 0.3% higher at $1,848.15/oz, while EUR/USD traded 0.1% lower at 1.0634.