U.S. Stocks May Give Back Ground Ahead Of Fed Announcement [Real-Time Trader]

India, Feb. 1 -- The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to give back ground following the strong upward move seen in the previous session.

Traders may look to cash in on yesterday's gains ahead of the Federal Reserve's monetary policy announcement this afternoon.

While the Fed is widely expected to raise interest rates by 25 basis points, traders will look to the accompanying statement for clues about outlook for further rate hikes.

After a slightly cautious start, stocks climbed higher on Tuesday thanks to sustained buying across the board.

Investors picked up stocks right through the day's session, digesting a slew of stronger than expected earnings updates and the latest batch of economic data.

Data showing a slowdown in the pace of growth in U.S. labor costs helped raise expectations that the Federal Reserve will soften its aggressive approach in fighting inflation.

The major averages all ended with strong gains. The Dow ended with a gain of 368.95 points or 1.09 percent at 34,086.04. The S&P 500 surged 58.83 points or 1.46 percent to 4,076.60, while the Nasdaq climbed 190.74 points or 1.67 percent to 11,584.55.

The Dow gained about 6.6 percent in the month, while the S&P surged nearly 3 percent, and the Nasdaq gained as much as 11.5 percent.

Data showing a drop in labor costs has reinforced the view that the central bank will likely slow the pace of its monetary policy tightening and raise interest rate by 25 basis points.

The central bank's accompanying statement will be in focus for clues about further interest rate hikes.

On the economic front, data from the Labor Department showed employment cost index wages in the U.S. increased by 1% on quarter in the fourth quarter of 2022, after rising 1.3% in the previous quarter.

The S&P/Case-Shiller Home Price Index in the United States decreased 0.8% month-over-month in November of 2022, the same as in October and marking a fifth consecutive decline.

A report from the Institute for Supply Management (ISM) said the Chicago PMI in the United States fell back to 44.3 points in January of 2023 from 44.9 in December and compared to market forecasts of 45. The reading pointed to a fifth consecutive month of contraction in business activity in the Chicago region.

Meanwhile, the Conference Board's consumer confidence index came in with a score of 107.1 in January, after coming in at a revised 109.0 a month earlier.

Shares of General Motors soared more than 8 percent after the company reported a 14.8 percent in surge in fourth-quarter net profit.

Caterpillar shares drifted down more than 3 percent after the company reported a 29 percent drop in fourth quarter net profit at $1.45 billion, down from $2.12 billion in the year-ago quarter.

McDonald ended 1.3 percent down, weighed down by an announcement from the company that inflation could weigh on its margins this year. McDonald said its fourth quarter earnings totaled $1.90 billion, or $2.59 per share, compared with $1.64 billion, or $2.18 per share, in last year's fourth quarter.

Pfizer gained nearly 1.5 percent, recovering from a weak start. The company said its net income in the fourth quarter totaled $5.00 billion, up 47 percent from $3.39 billion a year ago. Earnings per share grew 48 percent to $0.87 from $0.59 last year.

Home Depot, United Health, Goldman Sachs, Microsoft and 3M gained 2 to 3 percent.

Salesforce.com, Travelers Companies, Boeing, American Express, Honewell International, Walmart, Verizon, P&G and Coca-Cola also ended with solid gains.

Commodity, Currency Markets

Crude oil futures are rising $0.43 to $79.30 a barrel after jumping $0.97 to $78.87 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,948.20, up $2.90 compared to the previous session's close of $1,945.30. On Tuesday, gold rose $6.10.

On the currency front, the U.S. dollar is trading at 129.58 yen compared to the 130.09 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0899 compared to yesterday's $1.0863.

Asia

Asian stocks advanced on Wednesday even as a cautious undertone prevailed ahead of the U.S FOMC meeting outcome later in the day.

The Federal Reserve is likely to raise interest rates by another 25 basis points and signal that a pause in rate hikes is on the horizon.

Overnight data showing a slower-than-expected increase in U.S. labor costs helped spur expectations that inflation will ease further in the coming months and eventually pave the way for the Fed to cut rates by year-end.

Chinese shares rose after two manufacturing surveys painted a positive picture of the economy.

While the official manufacturing PMI swung to expansion from a 34-month low in the previous month, the Caixin survey showed that factory activity shrank more slowly than in the previous month.

China's Shanghai Composite Index climbed 0.9 percent to 3,284.92, while Hong Kong's Hang Seng Index gained 1.1 percent to settle at 22,072.18.

Japanese shares surrendered early gains to end on a flat note as a survey showed factory activity in the country shrank for a third month in January.

The Nikkei 225 Index finished marginally higher at 27,346.88, while the broader Topix slipped 0.2 percent to close at 1,972.73.

Alps Alpine, Tokyo Gas and Screen Holdings all jumped over 5 percent after announcing their financial results. On the losing side, Epson and TOTO lost 6-8 percent.

Seoul stocks rose sharply after a business survey showed factory activity in the country contracted at a slower pace in January. Investors shrugged off separate data showing that the country's trade deficit soared to a record.

The Kospi rallied 1.0 percent to 2,449.80, led by chipmakers such as Samsung Electronics and SK Hynix.

Australian markets eked out modest gains, with mining and financial stocks leading the surge. The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,501.70, while the broader All Ordinaries Index ended 0.3 percent higher at 7,709.70.

Flight Centre shares jumped more than 8 percent after the travel giant completed a $180 million placement to fund its purchase of U.K. luxury travel company Scott Dunn.

The manufacturing sector in Australia slipped into stagnation in January, the latest survey from Judo Bank revealed today, with a manufacturing PMI score of 50.0, down from 59.2 in December.

Europe

European stocks were seeing modest gains on Wednesday, as investors digested mixed manufacturing data from China and awaited interest-rate decisions from the Federal Reserve, the European Central Bank and the Bank of England for directional cues.

Meanwhile, Eurozone manufacturing PMI has been finalized at 48.8 in January, a five-month high and up from December's 47.8.

Separate data published by the British Retail Consortium showed that U.K. shop price inflation hit a record high in January as retailers offered fewer discounts amid rising input costs,

The BRC- NielsenIQ shop price index rose 8.0 percent on a yearly basis in January following a 7.3 percent gain in December.

The pan European STOXX 600 was up 0.3 percent at 454.34 after declining 0.3 percent on Tuesday.

The German DAX and France's CAC 40 index were marginally higher, while the U.K.'s FTSE 100 gained 0.2 percent.

Novartis AG shares declined 1.3 percent. The Swiss drug major reported sharply lower profit in its fourth quarter on lower sales and the absence of prior year's hefty Roche income.

British telecom major Vodafone Group fell 2.5 percent after Q3 revenue growth slowed.Sports-betting and gaming group Entain rallied 2.4 percent after lifting its profit outlook.

Halma added 2.5 percent after announcing it has acquired a manufacturer of fire detection products in a £22m deal.

Hannover Re shares slumped 4.3 percent. In order to take account of the growth in the property and casualty reinsurance portfolio and the increased loss expectation from natural catastrophes, the German reinsurer has increased its net major-loss budget for 2023 to 1.725 billion euros.

U.S. Economic Reports

Private sector job growth slowed by more than expected in the month of January, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment climbed by 106,000 jobs in January after surging by an upwardly revised 253,000 jobs in December.

Economists had expected private sector employment to increase by 178,000 jobs compared to the addition of 235,000 jobs originally reported for the previous month.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of January.

The ISM's manufacturing PMI is expected to edge down to 48.0 in January from 48.4 in December, with a reading below 50 indicating a contraction.

The Commerce Department is also due to release its report on construction spending in the month of December at 10 am ET. Construction spending is expected to be unchanged.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended January 27th.

Crude oil inventories are expected to inch up to by 0.4 million barrels after rising by 0.5 million barrels in the previous week.

The Federal Reserve is due to announce its latest monetary policy decision at 2 pm ET, followed by Fed Chair Jerome Powell's post-meeting press conference at 2:30 pm ET.

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