U.S. stock futures are trending lower as investors react to the Federal Reserve’s upcoming release of minutes from its December policy meeting. The first trading day of 2024 witnessed a decline in both the S&P 500 and Nasdaq Composite, driven partly by diminishing expectations of early-year interest rate cuts. Meanwhile, Tesla’s China-made electric vehicle (EV) sales experienced a significant surge in December, although the company faces stiff competition in the Chinese market.
Key Points:
- Futures Edge Lower:
- U.S. stock futures declined as investors awaited the release of minutes from the Federal Reserve’s recent policy meeting.
- Dow futures were down by 0.2%, S&P 500 futures fell by 0.2%, and Nasdaq 100 futures dropped by 0.4%.
- The previous session saw the S&P 500 and Nasdaq Composite lose ground, influenced by fading hopes of early-year interest rate cuts.
- Market Dynamics:
- The Magnificent Seven tech firms, including Apple, Nvidia, Google-parent Alphabet, and Microsoft, experienced declines. Apple’s shares were down around 4% following a downgrade by Barclays analysts citing weak hardware demand and revenue concerns in its services division.
- Analysts noted a fading year-end rally but anticipated only a modest loss of short-term momentum.
- U.S. Treasury Yields Climb:
- U.S. Treasury yields rose, indicating a potential easing of market excitement over early-year Fed rate cuts.
- The 10-year Treasury yield touched an over two-week high, and the 2-year yield also moved upward.
- The rise in Treasury yields led to the U.S. dollar index’s best daily performance since March 2023.
- Fed Minutes Awaited:
- Traders are focused on the release of the Federal Reserve’s December meeting minutes, scheduled for 19:00 GMT.
- The minutes may provide insight into how officials perceive the trajectory of borrowing costs in the coming months, impacting recent speculations about potential rate cuts.
- Tesla’s China-made EV Sales Surge:
- Data from the China Passenger Car Association revealed a 68.7% YoY surge in Tesla’s China-made electric vehicle sales in December.
- Despite the surge, Tesla faces intense competition in China, and its annual China-made sales amounted to just over half of its global deliveries.
- Tesla’s Shanghai plant, the company’s largest production hub, is awaiting regulatory approval for an expansion of its EV capacity.
- Oil Prices Retreat:
- Oil prices dipped ahead of the release of crucial weekly inventories data from the U.S.
- U.S. crude futures traded 0.6% lower at $69.94 a barrel, and the Brent contract dropped 0.5% to $75.53 per barrel.
As markets react to the Federal Reserve’s minutes and Tesla’s impressive surge in China-made EV sales, the landscape of early 2024 appears influenced by shifting expectations and competitive dynamics in both the financial and electric vehicle sectors. Investors keenly await insights from the Fed minutes to navigate potential changes in interest rate trajectories, while Tesla navigates competition and regulatory approvals in the critical Chinese market.
