U.S. Stocks Set To Open Lower As FOMC Minutes Disappoint Bulls
Fed Is Suprised By The Strength Of Household Spending
S&P 500 futures are losing ground in premarket trading in continuation of yesterday’s sell-off that took place in the last hours of the trading session and was triggered by the release of FOMC Minutes.
The Fed stated that it was suprised by strong household spending despite the economic uncertainty caused by the coronavirus pandemic.
Ahead of the release of FOMC minutes, many traders speculated that the Fed would indicate that it could adopt an inflation target, trying to push inflation above 2% to facilitate economic recovery.
While the Fed’s outlook remained dovish which was not suprising in the current environment, it was not dovish enough for the bulls.
Right after the release of FOMC minutes, stocks found themselves under pressure while the U.S. dollar rallied. The strength of the U.S. dollar put pressure on commodities, including gold, oil and silver.
At this point, the U.S. Dollar Index failed to settle above the resistance at the 93 level, and precious metals are rebounding after yesterday’s sell-off.
China States That It Will Hold Trade Talks With U.S.
According to the Chinese commerce ministry, U.S. and China have agreed to hold trade negotiations in the coming days.
U.S and China will discuss the implementation of the Phase 1 trade deal between the world’s biggest economies.
This is a positive catalyst for commodity markets but it remains to be seen whether this announcement will provide support to U.S. stocks as FOMC Minutes remain the key topic of the day.
Initial Jobless Claims Increase To 1.1 Million
The U.S. has just provided new Initial Jobless Claims and Continuing Jobless Claims reports.
Initial Jobless Claims increased to 1.1 million compared to analyst consensus of 925,000.
Meanwhile, Continuing Jobless Claims decreased to 14.8 million compared to analyst estimates of 15 million.
The increase in Initial Jobless Claims is concerning as it shows that the U.S. job market remains under significant pressure.
However, the negative impact of the disappointing Initial Jobless Claims report may be mitigated by the better-than-expected Continuing Jobless Claims report which indicated that more people who had previously lost their jobs managed to find new employment opportunities.
For a look at all of today’s economic events, check out our economic calendar.