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US stocks fall after core PCE data cements a Fed rate hike next week and after Amazon warns over its cloud business.

US futures

Dow futures -0.35% at 33709

S&P futures -0.3% at 4121

Nasdaq futures -0.2% at 13127

In Europe

FTSE +0.03% at 7850

Dax +0.1% at 15844

Amazon falls after cloud warning

US core PCE is 4.6% down from 4.7%

USD rises after sticky inflation data

Oil is set to fall for a sixth straight month 
 

US core PCE remains sticky, Fed expected to hike rates

US stocks are seen opening lower as investors digest the latest core PCE data and more tech earnings.

Core PCE the Federal Reserve's preferred gauge for inflation, cooled to 4.6% YoY in March, down from an upwardly revised 4.7% in February. Expectations had been for a decline to 4.5%. Meanwhile, personal spending fell to 0%, down from 0.1%, in a sign that rising interest rates and higher prices are deterring shoppers.

The data comes after GDP data yesterday showed that the US economy grew at a slower pace than expected in Q1 and after data earlier in the week, which showed that U.S. consumer confidence fell to a nine-month low, raising fears that the US economy could fall into recession later this year.

Still, the Federal Reserve is widely expected to raise interest rates by 25 basis points next week, which some believe could be the loft rate hike by the US central bank in the current hiking cycle, which has been the fastest monetary policy tightening cycle since the 1980s.

In addition to inflation data, investors were relatively downbeat after Amazon warned over its cloud business and after downbeat guidance from Snap.

Looking ahead, attention now turns to Michigan consumer sentiment, the final reading for April, which is expected to confirm the six 3.5 preliminary reading up modestly from 62 in March.
 

Corporate news

Amazon falls after the tech giant beat quarterly earnings and revenue forecast but warned of a slowdown in its key cloud computing division Amazon Web Services, a unit that is a major driver of the group’s overall profit.

Snap tumbles 18% pre-market after missing quarterly revenue expectations as changes to advertising hurt demand for ads.

Exxon Mobile is rising after the oil major reported a record Q1 profit as increased oil & gas production overshadowed a pullback in energy prices.
 

Dow Jones outlook – technical analysis

The Dow Jones rebounded from the 100 sma and has risen above the 20 sma but appears to be running out of steam. The bearish crossover on the MACD keeps buyers hopeful of further upside. Sellers could look for a retest of the 20 sma support ahead of the 100 sma at 33350. A break below here creates a lower low. On the flip side, should the 20 sma hold, then buyers could target 34000, the round number and falling trendline resistance for a breakout.

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FX markets – USD rises, JPY tumbles

The USD is rising after the core PCE data which showed that inflation remains sticky but that the consumer is slowing down spending. The Fed is still likely to hike next week.

EUR/USD is falling after eurozone GDP data was weaker than expected, growing at 0.1% QoQ, up from 0% in Q4 2022. German inflation also cooled by more than expected to 7.2% YoY from 7.4%. This was below forecasts of 7.3% but remains elevated ahead of the ECB decision next week.

USD/JPY- The pair has risen after the BoJ left interest rates on hold and maintained its yield curve control, dashing hopes of a hawkish surprise. The central bank meeting overshadowed data showing that Tokyo's core inflation had risen to a 40-year high.

EUR/USD -0.47% at 1.0980

USD/JPY +0.25% at 1.3615
 

Oil is set for a 6 straight monthly decline

Oil prices are price are holding steady for a third straight day but are set to fall across the week and fall across the month, marking the 6^th straight monthly decline in oil prices.

Concerns over more rate hikes and a possible recession in the US, along with slower-than-expected economic growth in the Eurozone have been the biggest drag on oil prices, which have closed the gap, giving back all the gains from when OPEC+ unexpectedly cut oil output.

Worries over slowing growth hurting the oil demand outlook have overshadowed data showing that oil stockpiles have fallen by more than expected.

WTI crude trades +0.45% at $75.03

Brent trades at +0.36% at $78.63 
 

Looking ahead

15:00 US University of Michigan Confidence

18:00 Baker Hughes Oil Rig Count

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