Fed officials discuss rates, Amazon Prime Day arrives – what’s moving markets

Comments from Federal Reserve policymakers spark hopes that the central bank’s campaign of interest rate hikes may soon be reaching a conclusion, albeit after a potential increase later this month. Elsewhere, Amazon kicks off its Prime Day sales event and Apple launches a store on megapopular Chinese messaging app WeChat.

1. U.S. futures mixed

U.S. stock futures were mixed on Tuesday, but mostly stayed close to the flatline, as investors look ahead to the release of all-important inflation data later this week and digest comments from Federal Reserve officials (see below).

At 05:17 ET (09:17 GMT), the Dow futures contract had dipped by 55 points or 0.16%, S&P 500 futures slipped by 1 point or 0.03%, and Nasdaq 100 futures rose 11 points or 0.07%.

The main indices advanced on Monday, breaking a three-session losing streak, with the broad-based Dow Jones Industrial Average increasing by 0.62% and the benchmark S&P 500 rising 0.24%. The laggard was the tech-heavy Nasdaq Composite, which moved up 0.18%.

Looming large on the economic calendar is the publication of the June consumer price index on Wednesday. The data could provide a glimpse into the path ahead for inflation and, by extension, the Fed’s interest rate policy.

2. Fed policymakers hint at end of rate-hiking cycle

The Federal Reserve may need to further raise interest rates to help corral elevated inflation, but the end of the central bank’s recent policy tightening campaign may be approaching, according to statements from several Fed officials on Monday.

In one example, San Francisco Fed President Mary Daly noted that “a couple more” borrowing cost increases are still needed this year. But she added “the last part” of these upticks is nearing as the balance improves between the Fed doing too much or too little to cool price growth.

Atlanta Fed President Raphael Bostic also argued that the central bank could stand to be patient on rate rises and allow the impact of its restrictive policy to spread.

Elsewhere, Fed Vice Chair for Supervision Michael Barr said there is still “work to do,” but added “I think we’re close.”

The comments come as the Fed has attempted to bring surging inflation back down to its 2% target through an unprecedented, year-long series of rate hikes. The Fed pushed pause on this cycle at its latest policy meeting in June, although many observers expect it to bump up rates again at an upcoming gathering later this month. What policymakers choose to do after that, however, remains a hotly-debated mystery.

3. Dollar touches two-month low; oil rises

The U.S. dollar touched a two-month low on Tuesday as traders reacted to the flurry of commentary from the Fed officials.

At 05:20 ET, the dollar index, a tracker of the greenback against a basket of six other major currencies, dropped by 0.14% to 101.83, flirting with levels last seen in mid-May.

The decline in the dollar helped fuel some modest gains in oil prices. Weakness in the currency tends to make crude cheaper for foreign buyers.

By 05:19 ET, U.S. crude futures traded 0.22% higher at $73.15 a barrel and the Brent contract climbed 0.12% to $77.78 per barrel.

4. Amazon’s “Prime Day” begins

Amazon (NASDAQ:AMZN) is set to roll out deep discounts during its annual “Prime Day” as the e-commerce behemoth attempts to entice U.S. consumers squeezed by inflationary pressures.

The two-day shopping event will see Amazon offer steep mark-downs on items ranging from clothing and exercise bikes to toiletries and cleaning supplies. The company will also offer travel discounts for the first time ever.

Analysts at Bank of America suggested that Prime Day could generate total gross merchandise value of $11.95 billion for Amazon, representing a 12% year-on-year surge.

But Amazon won’t be the only option for cost-conscious consumers. Big box retailers Best Buy (NYSE:BBY) and Walmart (NYSE:WMT) are also giving out deals in their own savings events, leading one analyst cited by Reuters to compare this week to the post-Thanksgiving shopping bonanzas Black Friday and Cyber Monday.

5. Apple opens store on WeChat

Apple (NASDAQ:AAPL) has opened up a store on the WeChat messaging app, in a bid by the California-based tech giant to boost its retail presence in China.

In a statement confirming the move, WeChat said that Apple products, including its megapopular iPhone, will be available for purchase via the store.

With more than 1.2 billion users, WeChat is one of the most dominant platforms in China, with features that go beyond instant messaging and into a variety of different services known as “Mini Programs” that can be downloaded like apps. This has made WeChat, as well as social media site Douyin, increasingly popular places for Chinese consumers to shop.

Apple, which also has an official store on Alibaba’s (NYSE:BABA) Tmall, managed to grow its market share in China to 19.9% during the first quarter, according to data from Counterpoint Research. However, smartphone sales have been flagging in the country, slipping by 5% annually in the opening three months of 2023.