Stock Futures Tick Lower; Oil Prices Rise

U.S. stock futures edged down ahead of a stretch of key economic releases, while European and Chinese stocks crept higher in a quiet trading session.

Futures tied to Dow Jones Industrial Average and Nasdaq-100 had lost 0.1% as of 12 p.m. ET, while contracts tied to the S&P 500 were flat. Trading volume was light, with the U.S. stock and bond markets closed for the Independence Day holiday.

The pan-continental Stoxx Europe 600 gained 0.1%, while Japan’s Nikkei 225 fell 1%. Hong Kong’s Hang Seng added 0.6% and the Shanghai Composite ticked up less than 0.1%.  

Chinese metal producers’ shares climbed after Beijing set export restrictions Monday on two minerals used in high-performance chips, in an effort to hit back against American export restrictions. The U.S. says the minerals, gallium and germanium, are critical to the production of semiconductors, missile systems and solar cells. China-listed Yunnan Chihong Zinc & Germanium gained over 6%.

Meantime, oil prices continued to climb Tuesday, with international benchmark Brent crude up 2% at $76.17 a barrel. This followed Monday’s news that both Russia and Saudi Arabia will restrict oil supplies to the global market through August. 

The U.S. stock market has kicked off the second half of 2023 on a muted note after barreling higher in the first six months, with many investors citing concerns about the direction of the economy and interest rates. Many investors think a recession could begin this year or next.

“I do expect the economic data to deteriorate and ultimately that’s where the downside risk for equity markets comes from,” said James Athey, an investment director at Abrdn.

Looking ahead, minutes from the Federal Reserve’s June meeting will be published Wednesday, offering insight into central bankers’ thinking when they held interest-rates steady last month. Investors widely expect the Fed to raise rates by a quarter-percentage point in July, bringing the benchmark federal-funds rate to a range between 5.25% and 5.5%.

The Fed’s minutes will be followed by the June jobs report on Friday. Economists surveyed by The Wall Street Journal forecast that the U.S. economy added 240,000 jobs last month, down from 339,000 jobs in May.

Ongoing labor-market strength has been a bright spot for investors, but signs of economic weakening are evident elsewhere. 

One recent reminder: The Institute for Supply Management said Monday that the U.S. manufacturing sector contracted for an eighth consecutive month. Stocks eked out small gains afterward, with the S&P 500 rising 0.1% and the Nasdaq Composite gaining 0.2% in an abbreviated session. Yields on U.S. Treasury notes rose.

Write to Caitlin McCabe at [email protected]