US stock futures were trading slightly lower on Wednesday amid signs of weakening global demand after China slashed its lending benchmarks to jump start sluggish demand. Investors are also focusing on Federal Reserve Chairman Jerome Powell's congressional testimony later in the day, which could possibly be a potential market mover. Powell's semi-annual speech to Congress will likely focus on the economy and possibly interest rate direction.
Stock futures tied to the Dow Jones Industrial Average slipped 66 points, or 0.19 percent, while S&P 500 fell 10.50 points, or 24 percent, and Nasdaq futures tumbled by 40 points, or 0.26 percent.
On Tuesday, all the three major US equity indexes ended the trading session in the red territory but off session lows, with oil super-majors Exxon Mobil Corp weighing on the S&P 500 and Dow Jones.
The Dow Jones Industrial Average tumbled 245.25 points, or 0.72 percent, to 34,053.87, the S&P 500 fell 20.88 points, or 0.47 percent, to 4,388.71 and the Nasdaq Composite plunged 22.28 points, or 0.16 percent, to 13,667.29.
The broad sell-off comes on the heels of the Nasdaq's longest weekly winning streak since March 2019, and the S&P 500's longest since November 2021. Including yesterday's loss, the benchmark S&P 500 has advanced 14.76 percent so far in 2023.
Investors also started the holiday-shortened week by taking profits in the wake of a sustained rally amid signs of weakening demand across the world.
Speaking to Reuters, Dakota Wealth's senior portfolio manager Robert Pavlik said that the market is trying to test whether these recent gains are going to stick. "The market runs in cycles and the most recent rally has surprised a lot of people," Pavlik said.
"The Fed hasn't given these hikes much time to have a real impact on the economy," Pavlik added.
"I don't know what the Fed sees that the rest of us don't see," Pavlik said. "Inflation is not running as rampant as it was. We've seen it at the grocery stores and we've seen it at the pump."
A series of Fed officials apart from Powell are expected to make remarks today. Traders will be looking to their comments for more clarity about their expectations for monetary policy and the US economy.
That comes after policymakers decided to pause their rate-hiking campaign, which had been ongoing since March last year, at their meeting last week — but insisting on further tightening ahead. Two more increases of 25 basis points each are expected this year, as per the central bankers.
No major data is expected today. Elsewhere, UK inflation figures defied expectations of a slowdown and held at 8.7 percent in May, while 'core' inflation rose above 7 percent for the first time since 1992. The Bank of England’s next interest rate decision is expected tomorrow (June 22).
With agency inputs
First Published: Jun 21, 2023 6:36 PM IST
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