U.S. Futures Fall in Morning Trade as Investors Look to Fed Remarks

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By Jacob Maslow

Wall Street futures slumped on Friday, erasing gains on Thursday as investors mull over signals from the Federal Reserve. The summer session has involved little surprise in economic reports, and a rise in U.S. oil rigs did not push crude oil down from a 7-week high.

Dow futures fell 27.5 points, or 0.15%, by the end of trade, slightly rebounding from a 50-point loss to start the session. S&P 500 futures fell 0.07%, down 1.5 points, nearly erasing harsher losses to start the day when futures dipped 0.30%. Nasdaq 100 futures followed the same pattern of falling 0.29% to start the day, recovering slightly to just a 0.09% loss.

The dollar edged off of a 7-week low earlier in the day amid new jobless claims data, which pointed to jobless claims falling by 4,000 last weeks to 262,000. The better-than-expected results beat analyst expectations of a 1,000 decline in claims.

The Federal Reserve also announced that the manufacturing index rose to 2.0 this month, beating August’s -2.9 reading.

Positive data helped U.S. futures recover slightly. The latest policy meeting of the Fed resulted in a divided future path of monetary policy. The minutes are under scrutiny as well as remarks given by various Fed officials this week.

John Williams, San Francisco Fed president, discussed a rate hike after the closing bell on Thursday. Williams remarked that a hike may occur “sooner rather than later.” The Fed president asserts that a rate hike may be a possibility as early as September.

Remarks from William sparked a dollar rebound after an eight-week low against the Swiss franc and the euro. Williams urged the Fed not to wait too long to raise rates, as it could be a costly mistake for the country.

Robert Kaplan, Dallas Fed president, commented that a low neutral rate has hampered policy normalization.

Fed Chair Janet Yellen has been uncharacteristically mute on the topic. Yellen is slated to give a speech at the Jackson Hole Economic Symposium on August 26 where she’ll discuss her views. The delay is likely to keep futures down next week as a result.

Odds of a rate hike aren’t forecasted to reach the 50% mark until February 2017. September’s odds are hovering around 12%, according to analysts.

Oil prices continue to rally this week, with prices reaching two-month highs after crude rallied for six straight days. U.S. crude and London Brent gained more than 20% since August lows to hit a bull market. The rally is fueled by a meeting of the International Energy Forum slated for next month.

The meeting will include OPEC members, with the hope that measures will be taken to support oil prices.

Baker Hughes is reporting that rigs actively drilling for oil in the United States have increased by 15, up to 396 last week. The data would result in seven straight weeks of active drilling increases in the United States.

U.S. crude futures rallied on the news, the rare future rallying on Friday. Futures fell in early morning trade before reaching a 0.54% gain, up 0.26 points at the end of the day on Friday. Brent oil ended the day down 0.18%.

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