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STOCK MARKET NEWS: Futures slip, Powell speaks, Goldman raises rate outlook

Stock futures cautious following rally

U.S. equity futures were searching for direction on Thursday following a rally.

Oil prices rebounded Thursday morning after dropping below key technical support levels in the previous session.

U.S. crude futures were trading around $82.00 per barrel.

Brent crude futures trading around $88.00 per barrel after closing at their lowest since early February in the previous session.

Traders will be listening to Fed chairman Jerome Powell when he appears at the Cato Institute’s annual monetary conference. The event will highlight a conversation with Powell on monetary policy.

On the economic docket will be the latest jobless claims figures.

In Asia, Japan’s benchmark Nikkei 225 surged 2.3%, Hong Kong’s Hang Seng slipped 1.0% and China’s Shanghai Composite fell 0.3%.

Investors are also watching for what may happen on interest rates at the European Central Bank’s meeting.

On Wall Street, the S&P 500 rose 1.8%, its biggest single-day gain in four weeks, with roughly 95% of the stocks in the benchmark index closing higher. The Dow Jones Industrial Average rose 1.4% and the tech-heavy Nasdaq climbed 2.1%. 

The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, was at 3.26% Thursday morning.

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Goldman Sachs steepens US rates outlook

Goldman Sachs sees the Federal Reserve raising interest rates by another 75 basis points this month, the investment bank’s analysts said in a note.

They had previously forecast a 50 bps hike in September. Goldman analysts see a road of steeper hikes.

The analysts also raised their November forecast from 25 bps to 50 bps and see the Fed Funds rate window at 3.75-4% by year’s end.

“Fed officials have sounded hawkish recently and have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like,” said the analysts, led by economist Jan Hatzius, in the note published late on Wednesday.

“How the drag from tighter financial conditions will net out with other key growth impulses in 2023 is more uncertain, and we could imagine the hiking cycle extending beyond this year.”

Fed funds futures imply about a 77% chance of a 75 bps hike at the September policy meeting and a peak in the benchmark rate of around 4% in early 2023.

Reuters contributed to this post.

Europe is going to see higher interest rates

The European Central Bank’s meeting Thursday is not about whether to raise rates, but by how much. 

Analysts say it will be between a half-point and three-quarters of a point. 

The ECB is playing catchup as inflation hits a record 9.1%. It could go higher as prices for natural gas go through the roof because Russia has been cutting back supplies. 

Verizon survey: Financial fears grow among small business owners with inflation top of mind

EXCLUSIVE: The latest Verizon Business survey found a growing number of small business owners are worried about their financial security with inflation cited as their biggest headache.

And a majority say business is not better than it was a year ago.

The annual State of Small Business poll conducted by Morning Consult and released Thursday shows rising prices remain decision-makers’ prime concern, with more than 82% of respondents expressing worries over inflation.

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Gasoline decline continues

The average price of a gallon of gasoline slipped on Wednesday to $3.751, according to AAA. Wednesday’s price was $3.764. Gas has been on the decline since hitting a high of $5.016 on June 14.

Analysts and traders say wholesale gasoline prices are expected to keep falling in coming months as U.S. refiners overproduce fuel to try to rebuild low stocks of diesel and heating oil.

Diesel’s price slipped to $5.040 per gallon.

Oil rises on tight supply

Oil prices rebounded Thursday morning after dropping below key technical support levels in the previous session.

U.S. crude futures were trading around $82.00 per barrel.

Brent crude futures trading around $88.00 per barrel after closing at their lowest since early February in the previous session.

The energy standoff between Europe and Russia focused investor minds on how tight fuel supply may become. Prices drew support from Russian President Vladimir Putin’s threat to halt the country’s oil and gas exports if price caps are imposed by European buyers.

The European Central Bank is expected to raise interest rates sharply when it meets later on Thursday. A U.S. Federal Reserve meeting follows on Sept. 21.

Cryptocurrency prices for Bitcoin, Ethereum and Dogecoin were lower Thursday morning.

Bitcoin was trading around $19,000, after snapping a two-day losing streak.

For the week, Bitcoin was trading more than 3% lower. For the month, the cryptocurrency was off more than 4%. Bitcoin is down more than 58% year-to-date.

Ethereum was trading around $1,600.

For the week, Ethereum was trading higher by more than 5%.

Dogecoin was at 5 cents and was up less than 1% in the past week.