Fed minutes, US futures, gold, Walmart

Investing.com – Wall Street is set to start the day with slight gains as investors await the release of minutes from the Federal Reserve’s latest meeting and non-farm payrolls revisions. Gold continues to hit record highs while Walmart plans to sell its stake in Chinese e-commerce giant JD (NASDAQ:).com.

1. Fed minutes and payroll revision provide insight into interest rate cuts

Investors are eagerly awaiting the release of the results of the Federal Reserve’s latest meeting, which is due later in the meeting and will give them further insight into the prospects of an imminent rate cut and its likely magnitude.

At its last meeting at the end of July, the US Federal Reserve left interest rates unchanged and currently kept its key overnight rate in the range of 5.25 to 5.50 percent.

However, comments from Fed officials subsequently pointed more toward a rate cut in September, and the minutes are expected to reiterate that dovish stance.

The US Federal Reserve Governor said on Tuesday she remained cautious about cutting interest rates and warned against overreacting to recent data on slowing inflation as upside risks remained.

However, Bowman, a well-known hawk, added that if there was further progress on inflation, it would become “appropriate to gradually lower the policy rate to prevent monetary policy from becoming too restrictive of economic activity and employment.”

In addition, preliminary revisions for the US are expected to be published later in the meeting. A significant downward revision is expected, which would support a further reduction in interest rates.

“The number of jobs created could be revised downwards by as much as 800,000 jobs, according to some estimates, which would mean that the labor market may not be as strong as previously portrayed,” ING analysts said in a note.

2. Futures rose slightly ahead of Fed minutes

U.S. stock futures rose slightly on Wednesday ahead of the release of minutes from the Fed’s latest meeting and revisions to payroll data, as investors sought clues as to when the Federal Reserve will begin cutting interest rates.

At 04:20 ET (08:20 GMT), the contract was up 45 points, or 0.1 percent, climbing 5 points, or 0.1 percent, and rising 10 points, or 0.1 percent.

Wall Street’s leading indices closed with small losses on Tuesday, ending their winning streaks. The broad market lost 0.2 percent, technology-heavy stocks slipped 0.3 percent and the stock index fell 0.2 percent.

Ahead of Jerome Powell’s speech in Jackson Hole on Friday, investors will focus on the minutes of the Federal Reserve’s latest meeting as well as revisions to the latest wage and salary data.

In the corporate sector Toll Brothers (NYSE:) rose in premarket trading after the homebuilder beat third-quarter earnings expectations and raised its full-year delivery forecast.

Keysight Technologies (NYSE:) The stock rose over 10% in premarket trading after the company, which makes testing equipment, provided solid fourth-quarter sales guidance.

3. Walmart sells shares in JD.com

Walmart (NYSE:) has decided to change course in the important Chinese market. The company is selling its stake in Chinese e-commerce company JD.com and will now focus on its own activities in the world’s second-largest economy.

The supermarket chain wants to raise around $3.74 billion by selling its stake in JD.com, Bloomberg reported on Tuesday. Morgan Stanley acted as broker-dealer for the offer.

“This decision allows us to focus on our strong China businesses for Walmart China and Sam’s Club and deploy capital to other priorities,” Walmart said.

The US retailer owns a 5.19 percent stake in JD.com, according to LSEG data. The partnership began in 2016 when Walmart sold its Chinese online grocery store Yihaodian in exchange for a 5 percent stake in JD.com.

Walmart reported a 17.7% year-over-year increase in sales of its China business to $4.6 billion in the second quarter, driven by strong growth of its Sam’s Club warehouse chain and its digital offering.

JD.com reported better-than-expected second-quarter profit, but China’s retail market is suffering from a continued decline in consumer confidence due to concerns about employment and income.

4. Focus on more retail revenue

The US reporting season is coming to an end, but there are still numbers, especially from the retail sector, that need to be digested.

Goal Corporation (NYSE:) and TJX Companies (NYSE:) will release quarterly earnings later in the session and investors will be keen to see if they gain market share from back-to-school sales.

Data from the National Retail Federation in early July shows that expected per-household spending on back-to-school shopping will decline slightly to $875, down from a record $890 in 2019.

Home improvement retailer Lowe’s (NYSE:) lowered its full-year forecast on Tuesday, another sign of a difficult environment for the retail sector.

About 93 percent of S&P 500 companies have reported their second-quarter results, and so far 79 percent of reporting companies have beaten analysts’ earnings estimates, while only 60 percent have beaten revenue forecasts, according to FactSet data.

5. Gold near record high

Gold prices slipped on Wednesday but remained near record highs as the prospect of lower U.S. interest rates hit the dollar and encouraged further capital flows into the yellow metal.

By 4:20 a.m. ET, it was down 0.2% at $2,509.52 an ounce, while the December expiring variety was down 0.1% at $2,547.40 an ounce.

The price of gold has seen significant gains, with gains of over 20% year to date and over 30% in the past 12 months. This has taken the price of gold to new all-time highs as the prospect of lower interest rates bodes well as it lowers the opportunity cost of investing in non-yielding assets.

However, there were other key factors that contributed to the yellow metal’s rapid rise. One of the main reasons for this was geopolitical tensions.

The freezing of Russian foreign exchange reserves in 2022 has made Western bonds less attractive to non-democratic countries. As a result, gold has become a more attractive alternative for central banks.

Added to this is the problem of significant budget deficits in major economies such as the USA, Great Britain and France.

The current political climate in the US is also contributing to the rise in the price of gold: proposals for higher tariffs, price controls and high subsidies are fueling concerns among investors.