US open: Stocks flip into the red ahead of Fed Beige Book

la fed va resserrer rapidement sa politique dans les mois a venir

Stocks on Wall Street moved into negative territory shortly after the start of trading as investors waited on the release of the Federal Reserve's Beige Book in order to glean insights into the outlook for the central bank's policy.

Against that backdrop, some analysts in the City appeared to interpret remarks from the US President the night before as hawkish for central bank policy.

"Wall Street isn't in a happy mood either. President Biden’s comments on giving Powell room to combat inflation seem to be overwhelming the hope that the Fed might pause its hiking moves towards the end of the summer. These were probably misplaced anyway, but they were enough to drive last week’s bounce," said IG chief market analyst Chris Beauchamp.

"While the Dow is still above last Thursday’s open, before it really took off into the weekend, and for now is also above the mid-May high, the sight of White House and Fed arm-in-arm means there won’t be much pressure on the FOMC to become more dovish any time soon."

As of 1533 GMT, the Dow Jones Industrials had flipped into the red and was slipping 0.67% or 219.87 points lower to 32,770.25, alongside a similar-sized fall on the S&P 500 to 4,1010.70.

The Nasdaq Composite on the other was only 0.29% or 35.66 points lower at 12,048.29.

Wednesday's main data release, the Institute for Supply Management's manufacturing sector Purchasing Managers' Index, did come in ahead of forecasts.

The headline PMI improved from a reading of 55.4 for April to 56.1 in May (consensus: 55.0).

Release of the Beige Book was scheduled for 1900 GMT.

In the background, Moscow reacted poorly to news that the US was set to ship advanced missile systems to Ukraine, although according to UN Secretary General, Antonio Guterres, progress was being made in talks to allow exports of Ukrainian grain and Russian fertilisers form Black Sea ports.

Worth noting, in an interview with Marketwatch published overnight, Federal Reserve Bank of Atlanta President, Raphael Bostic, said that any pause in Fed rate hikes that might occur should not be interpreted as a so-called 'Fed put'.

Also scheduled for later in the day, Federal Reserve Bank of New York boss, John Williams, was set to deliver a speech at 1630 GMT while his counterpart at the San Francisco Fed, James Bullard, was expected to do the same at 1800 GMT.

On the company side of things, Hovnanian Enterprises was an early gainer after the homebuilder reported that its adjusted earnings roughly tripled during the second quarter on the back of stronger gross margins.

Salesforce was another top gainer after the maker of customer relationship management software raised its guidance for full-year earnings per share to $4.74-4.76 and that for non-GAAP operating margins from 20.0% to 20.4%.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $179.54 12.04%
Dow Chemical Co. (DOW) $68.46 0.71%
Chevron Corp. (CVX) $175.69 0.59%
Microsoft Corp. (MSFT) $272.20 0.12%
Apple Inc. (AAPL) $148.95 0.07%
Honeywell International Inc. (HON) $230.94 0.00%
Dowdupont Inc. (DWDP) $30.52 0.00%
Intel Corp. (INTC) $44.38 -0.10%
Cisco Systems Inc. (CSCO) $44.98 -0.16%
International Business Machines Corporation (CDI) (IBM) $138.60 -0.17%