Stock futures remained flat on Wednesday evening as investors awaited the next market catalyst. However, GameStop shares experienced a significant drop of approximately 19% in after-hours trading after the video game retailer fired its CEO Matthew Furlong and appointed Ryan Cohen as its executive chairman.
At 07:39 GMT, the blue chip Dow futures are trading 33691.00. The benchmark S&P 500 futures are at 4268.75, down 5.50 or -0.13% and the tech-weighted Nasdaq futures are at 14275.00, down 58.50 or -0.39%.
During the regular session on Wednesday, the S&P 500 and the Nasdaq Composite appeared to take a break from their recent rally. The broad-market index closed 0.38% lower, while the Nasdaq dropped 1.29%. On the other hand, the 30-stock Dow bucked the trend with a gain of 0.27% or 91.74 points.
Investors Await Crucial Fed Meeting
With a lull in news, investors are eagerly anticipating the upcoming Federal Reserve meeting. The Fed’s guidance and the release of the consumer price index (CPI) data on Tuesday will be crucial. Market participants are particularly interested in the U.S. inflation data, forecasted to be released on June 13.
Expectations suggest a 0.30% increase in prices for May, which holds immense significance as it will heavily influence the Federal Reserve’s decision-making process. Rising inflation could strengthen the case for further interest rate hikes, while a moderation in price growth may lead to a more cautious approach from the Fed.
Persistent Inflation Spurs Central Bank Caution
Inflation levels have consistently surpassed the target not only in the United States but also across other G10 countries. As a result, central banks are likely to exercise caution and prudence in their policy decisions. The market has adjusted its expectations for a rate cut by the Federal Reserve this year due to persistent inflation.
US Stock Traders in Holding Pattern
Investors seem to be in a holding pattern ahead of the Federal Reserve’s policy meeting on June 13 and 14. Economic indicators suggest a gradual decrease in inflation, although it remains above the central bank’s 2% target. Wage growth has also slowed, with a 0.4 percentage point decrease from April. Markets are currently pricing a roughly 67.8% chance that the Fed will keep rates steady at the upcoming meeting, according to the CME FedWatch Tool.
GameStop Shakeup: CEO Fired, Stock Plunges
GameStop shook the stock market by abruptly firing CEO Matthew Furlong and appointing Ryan Cohen as executive chairman. This announcement, made on Wednesday, caused GameStop’s stock to plummet by over 20% after hours. Intriguingly, the company disclosed this news alongside its quarterly financial results, which revealed lower revenue and reduced losses compared to last year. Although GameStop didn’t specify the reason for the CEO’s termination, it acknowledged the change in its SEC filing.
Jobless Claims, Wholesale Inventories On Tap
Looking ahead, more economic data is expected to arrive on Thursday morning, including weekly jobless claims and wholesale inventories. These indicators will provide further insights into the state of the economy and may influence market sentiment.
Investors Move to Sidelines
In summary, stock futures remained flat, GameStop shares tumbled, and major indices took a breather in the recent session. Investors are eagerly awaiting the Federal Reserve’s guidance and the release of the CPI data, which will shape the central bank’s decision-making process. Persistent inflation levels have reduced expectations for a rate cut, and caution is expected from central banks globally. The upcoming Federal Reserve meeting and additional economic data will continue to be in focus as investors gauge the direction of the market.