US pre-open: Stocks seen lower as Fed signals more rate hikes this year

US stock futures pointed to a weaker open on Wall Street on Thursday after the Federal Reserve left rates unchanged but signalled that two more hikes were on the way later this year.

At 1135 BST, Dow Jones Industrial Average futures were down 0.2%, while S&P 500 and Nasdaq futures were 0.4% and 0.7% lower, respectively.

Joshua Mahony, chief market analyst at Scope Markets, said: "Wall Street may have initially shaken off the latest monetary policy move from the Fed of no rate hike this month, but with a hawkish undertone, expectations are for another 25 basis points to be added at the end of July.

"Whilst the news has been well received in some quarters - the Hang Seng added more than 2% on the day - with the S&P having hit fresh highs for the year, it’s perhaps no surprise that we’re seeing a degree of profit taking emerge.

"In light of that stance from the Fed, it would be no real surprise if we were to see hotter than forecast retail sales figures coming in for May when they are published ahead of the open. Earnings news continues to trickle out with retailer Kroger due before the bell and Adobe reporting after the close."

Investors will also be mulling some disappointing data out of China, which prompted the country’s central bank to cut its benchmark policy rate for the first time in almost a year.

The People’s Bank of China clipped its medium-term lending facility rate to 2.65% from 2.75% in an effort to stimulate the economy towards its growth target of 5%.

Official data showed retail sales and industrial production both came in lower than forecast, rising 12.7% and 3.5% respectively year-on-year last month but lower than the 18.4% and 5.6% recorded in April. The annual rise was distorted by a low base given Covid lockdowns in the second quarter of 2022.

Figures also showed that fixed asset investments rose 4% year-on-year in May, having risen 4.7% the month before, missing consensus expectations for a 4.4% jump.

On the macro front, the NY Empire State manufacturing index for June is due at 1330 BST, along with retail sales figures for May and the latest initial jobless claims. The Philadelphia Fed manufacturing survey is also due at the same time.

In corporate news, Patterson-UTI Energy and NexTier Oilfield Solutions said they had agreed to merge, creating a $5.4bn oil services firm.