U.S. stock futures pared modest gains early Wednesday after Wall Street Journal headlines suggested another 0.75% rate hike by the Federal Reserve is likely later this month.
Around 8:00 am ET, S&P 500 and Nasdaq futures were down about 0.1%, while Dow futures were down 0.03%.
Earlier in the morning futures for all three indices were higher.
The reversal in futures followed the latest report by Nick Timiraos in the Wall Street Journal, who wrote early Wednesday, “…Powell’s public pledge to lower inflation, even if it raises unemployment, appears to have put the central bank on track to raise interest rates by 0.75 percentage points instead of 0.50 points this month.”
“A difficult 2022 for equities may not get much easier as we now await better news on the inflation front, facing a seasonally weak September,” strategists at LPL Financial Research said in a recent note.
Since 1950, the S&P 500 has averaged a 0.54% drop in September, its worst 12-month performance on record. Additionally, September was the only month in the past decade in which the benchmark posted an average loss.
In commodities, oil prices rose on Wednesday amid reports that President Vladimir Putin threatened to cut off energy supplies if price caps were imposed on Russian oil and gas exports from the West over the country’s war in Ukraine. West Texas Intermediate crude was up 0.4% at $87.23 a barrel, while Brent futures were up by about the same margin at $93.21 a barrel.
However, oil reversed those gains along with broader markets after the WSJ report.
And in cryptocurrency markets, Bitcoin (BTC-USD) fell below $19,000, testing a new low for the year.
Shares of Sharpie marker-, Elmer’s glue- and Yankee Candle-maker Newell Brands ( NWL ) fell nearly 5% in premarket trading after the company cut its full-year guidance after the closing bell on Tuesday . Chief executive Ravi Saligram said Newell saw a “significantly larger-than-expected contraction” in retail orders as inflation pressures consumer spending.
GameStop ( GME ) was in the spotlight Wednesday, with the meme-stock favorite reporting second-quarter earnings after the market closed. Shares were down about 1% before the open.
In July and August, analysts cut their third-quarter earnings per share estimates by a wider margin than average, according to FactSet Research. The bottom-up third-quarter EPS estimate – a summation of the average third-quarter EPS estimates for all S&P 500 companies – fell 5.4% from June 30 to August 31.
Typically, analysts cut earnings estimates in the first two months of the quarter. Over the past two decades, the average bottom-up EPS estimate decline in the first two months of the quarter was 2.9%.
Morgan Stanley’s Michael J. Wilson, one of Wall Street’s most bearish strategists, cut his earnings-per-share growth expectations for the year in a note on Tuesday, citing the growing threat posed by a slowing economy — more from inflation or monetary tightening by the US Federal Reserve. Wilson expects earnings to fall 3 percent even if the U.S. economy doesn’t enter a recession.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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