Wall Street eyes bounce back ahead of services activity data

Wall Street eyes bounce back ahead of services activity data

The Federal Reserve has raised rates by 2.25 percentage points this year. — Reuters pic

Wednesday, 03 Aug 2022 9:16 PM MYT

NEW YORK, Aug 3 — US stock indexes were set for higher open today after two days of declines as focus shifted to services activity data due later in the session for more clues on the health of the economy, while PayPal soared on raising its forecast.

The Institute of Supply Management’s data, due at 10 a.m. ET, is expected to show its index for non-manufacturing activity slipped to 53.5 last month from 55.3 in June, the fourth straight monthly decline.

“What we want is Goldilocks number, big numbers right now are bad, whether they’re big and good, or big and bad. What we actually want is pretty small increases or small decreases,” said Jason Blackwell, chief investment strategist at The Colony Group.

“That tells us that the Fed is working, (but) not too hard (to) take us into a deeper recession.” The Federal Reserve has raised rates by 2.25 percentage points this year and has vowed to be data-driven in its approach toward future hikes.

Meanwhile, St. Louis Federal Reserve President James Bullard said today the US central bank will be steadfast in raising interest rates to bring inflation running at four-decade highs back to its 2 per cent target.

Wall Street started August on a sour note after data on Monday showed factory activity across the United States, China and Eurozone weakened in July, with House of Representatives Speaker Nancy Pelosi’s visit to Taiwan sparking concerns about escalating tensions between the United States and China.

Pelosi left Taiwan today after pledging solidarity and hailing its democracy, leaving a trail of Chinese anger over her brief visit.

Global financial markets have been roiled this year by the Ukraine war, soaring inflation and tightening financial conditions.

Still, a largely upbeat second-quarter earnings season has helped markets bounce back recently. The benchmark S&P 500 index and tech-heavy Nasdaq are up 12.4 per cent and 16.9 per cent, respectively, from lows hit in mid-June.

At 8:37 a.m. ET, Dow e-minis were up 168 points, or 0.52 per cent, S&P 500 e-minis were up 23.75 points, or 0.58 per cent, and Nasdaq 100 e-minis were up 78.5 points, or 0.61 per cent.

PayPal Holdings climbed 13.6 per cent in premarket trading after it raised its annual profit guidance and said activist investor Elliott Management has an over US$2 billion (RM8.1 billion) stake in the fintech company.

CVS Health Corp rose 4.1 per cent as the largest US pharmacy chain raised its annual profit forecast after strength in its insurance business and sales of Covid-19 over-the-counter test kits helped it beat estimates for quarterly results.

Starbucks Corp gained 1.7 per cent after the coffee chain posted upbeat quarterly profit aided by higher prices and strong demand for its coffees in the United States.

Advanced Micro Devices Inc slid 4.5 per cent after the chip designer forecast third-quarter revenue slightly below Wall Street estimates.

Airbnb Inc dipped 6.2 per cent after the vacation rental company forecast bookings for the current quarter at par with the record-breaking previous one, disappointing investors. — Reuters