United States Stocks Wall Street Anticipates Decline as Chip Stocks Falter; Market Awaits Powell's Speech

Wall Street prepares for a lower open as chip stocks decline ahead of Powell's speech. Stay informed on market trends and interest rate outlook.

Jun 28, 2023 - 09:09
Jun 28, 2023 - 09:10
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United States Stocks Wall Street Anticipates Decline as Chip Stocks Falter; Market Awaits Powell's Speech
United States Stocks Wall Street Anticipates Decline as Chip Stocks Falter; Market Awaits Powell's Speech

Wall Street is poised for a lower open on Wednesday as concerns loom over potential restrictions on artificial intelligence (AI) chip sales to China. Investors are eagerly awaiting Federal Reserve Chair Jerome Powell's speech, seeking insights into the outlook for interest rates.

Chipmakers Nvidia and Advanced Micro Devices experienced premarket declines of 3.5% and 3.2%, respectively, following reports that the Commerce Department could halt chip shipments to China as early as July. This development weighed on semiconductor stocks, including Intel, Marvell Technology, and Qualcomm, all of which saw declines exceeding 1%.

Tuesday's upbeat economic data boosted market sentiment, alleviating fears of an impending recession, while simultaneously raising the likelihood of another interest rate hike by the Federal Reserve in the coming month.

Market attention is currently focused on a panel discussion featuring key central bank policymakers, including Powell and European Central Bank President Christine Lagarde, at the annual ECB forum in Portugal. Powell's remarks are expected to reinforce a data-dependent approach to policymaking and shed light on potential interest rate adjustments.

Market participants have already factored in a 76.9% probability of a 25 basis point rate hike in July, pushing the rates to a range of 5.25%-5.50%. It is anticipated that the central bank will maintain rates at this level until the end of 2023, according to CMEGroup's Fedwatch tool.

Despite the recent selloff triggered by Powell's hawkish comments, the S&P 500, Nasdaq, and Dow have witnessed quarterly gains, driven by a rally in technology and growth stocks and optimism surrounding the Fed's future stance.

Investors eagerly await upcoming economic indicators, including the Personal Consumption Expenditures (PCE) index, initial jobless claims data, and the final reading of the first-quarter GDP, to gauge the current state of the U.S. economy. Additionally, the release of the Fed's annual stress test results for large banks after the market close will have an impact on the banking sector.

As trading begins, Dow e-minis show a marginal decline of 0.02%, while S&P 500 e-minis are down 0.19%, and Nasdaq 100 e-minis report a 0.37% decrease.

Boeing witnessed a 1.3% rise after announcing that around 90% of its China 737 Max fleet had resumed commercial operations by the end of June.

On the other hand, General Mills experienced a 5.4% slide as the packaged food maker forecasted full-year profits below analysts' estimates, causing an impact on the company's stock performance.

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