Opening Comment — Wednesday, May 07, 2025
DJIA: 40,829.00, down 389.83
S&P 500: 5,606.91, down 43.47
NASDAQ: 17,689.66, down 154.58
Stocks higher ahead of Fed meeting
Stock futures are higher Wednesday morning ahead of today’s conclusion of the Federal Reserve’s (Fed’s) May policy meeting and following press conference from Chair Jerome Powell. Investors will also be looking forward to today’s consumer credit data. As of 7:15 AM ET, the Dow is rising 0.8%, while the S&P 500 is up 0.7%. The Nasdaq 100 is also increasing 0.7% relative to fair value on the GLOBEX.
U.S. equities were lower on Tuesday as the U.S. trade deficit widened more than expected in March, reaching a record $140.5 billion from February’s revised $123.2 billion. The Dow was down 1.0%, while the tech-heavy Nasdaq Composite fell 0.9%. The S&P 500 decreased 0.8% with nine of 11 sectors finishing in negative territory. The Utilities sector was the top performer, rising 1.2%, while the Health Care sector was the bottom performer, falling 2.8%.
On the data front, the Mortgage Bankers Association’s gauge of mortgage applications increased by 11.0% for the week ending May 2 versus the prior week’s decrease of 4.2%. The Department of Energy’s measure of crude oil inventories is expected to show a decrease of 1.86 million barrels for the week ending May 2, compared to the prior week’s decrease of 2.70 million barrels. Consumer credit is expected to have expanded by $9.39 billion in March versus the prior month’s decline of $810 million.
Across the pond, European stocks are lower in mid-day trading as German factory orders rose by 3.6% month-over-month (MOM) and 3.8% year-over-year (YOY) in March, surpassing forecasts. Meanwhile, France’s trade deficit narrowed in March. The construction purchasing managers’ indexes (PMIs) for both the U.K. and Germany rose in April, though both remained in contractionary territory. The eurozone’s retail sales declined by 0.1% MOM in March, as expected, while rising by 1.5% YOY, slightly below the forecast.
Overnight in Asia, stocks were mostly higher as Japan’s finalized composite and services PMIs from Jibun Bank for April were revised slightly upward. Meanwhile, China’s foreign reserves expanded in April and the country’s central bank announced interest rate cuts.
In FOREX trading, the dollar is higher ahead of today’s Fed policy decision and tomorrow’s Bank of England meeting.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 0.6% higher at $59.44/barrel ahead of an expected decline in reported crude oil inventories.
In the metals complex, gold is 0.7% lower at $3,399.30/ounce following a strengthening dollar.