US pre-open: Futures point to losses ahead of Powell testimony

Wall Street futures were firmly in the red ahead of the bell on Wednesday as market participants patiently awaited for Federal Reserve chairman Jerome Powell to testify in front of Congress later in the day.

As of 1230 BST, Dow Jones futures were down 1.17%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.39% and 1.60% firmer, respectively.

The Dow closed 641.47 points higher on Tuesday as traders returned from the Juneteenth break in a slightly more positive mood.

Futures headed south before the bell on Wednesday as investors prepared for Powell to kick-off two days of testimony in Washington at 1330 BST - a week after the central bank hiked interest rates by three-quarters of a percentage point in an effort to cool inflation, its largest rate increase since 1994.

Also in focus, analysts at Goldman Sachs warned that a recession was beginning to look more and more likely for the US economy, stating that risks were now "higher and more front-loaded".

"The main reasons are that our baseline growth path is now lower and that we are increasingly concerned that the Fed will feel compelled to respond forcefully to high headline inflation and consumer inflation expectations if energy prices rise further, even if activity slows sharply," said Goldman Sachs.

On the macro front, mortgage applications increased 4.2% in the seven days ended 17 June, according to the Mortgage Bankers' Association of America, a slight deceleration from the previous week's 6.6% rise. The purchase index rose 7.9%, while the refinancing rate fell 3.1% as the average contract rate on a 30-year fixed-rate mortgage rose by 33 basis points to 5.98% - the highest since November 2008

In addition to Powell's testimony, Chicago Fed president Charles Evans, Richmond Fed president Barkin, and Philadelphia president Patrick Harker will all deliver speeches throughout the course of the day.

No major corporate earnings were slated for release on Wednesday.

Reporting by Iain Gilbert at Sharecast.com