U.S. Stock Futures Rally on Rate Concerns, Exxon Mobil Suffers on Earnings

U.S. stock index futures rose on Wednesday, recovering from significant losses driven by increased uncertainty surrounding the Federal Reserve’s pace of future interest rate cuts.

Dow Jones futures climbed about 135 points, or 0.3%, S&P 500 futures gained 20 points, or 0.4%, and Nasdaq 100 futures added 87 points, or approximately 0.4%.

On Tuesday, Wall Street indexes closed lower as rising Treasury yields pressured stocks. Better-than-expected job openings data underscored persistent strength in the labor market, fueling concerns about prolonged inflation and its impact on rate cuts.

The S&P 500 dropped 1.1%, the Nasdaq Composite fell 1.9%, and the Dow Jones Industrial Average dipped 0.4%.

Focus on More Economic Data

Tuesday’s data revealed an unexpected increase in job openings and inflationary pressures, which could prompt the Federal Reserve to adopt a cautious approach to cutting interest rates this year, a stance reaffirmed by policymakers over the weekend.

Investors are now keenly awaiting December’s nonfarm payrolls report on Friday, which could provide further insights into the Fed’s monetary policy trajectory.

Ahead of that, Wednesday’s economic data includes the ADP private payrolls report, expected to show a slight decline in private sector jobs for December. Additionally, initial unemployment claims for the previous week are forecast to edge higher.

Market participants will also closely follow Federal Reserve Governor Christopher Waller’s speech on Wednesday, alongside the release of the FOMC minutes, for more clarity on central bank policy expectations.

Exxon Mobil Earnings Under Pressure

Exxon Mobil (XOM) is in the spotlight after the oil giant warned that fourth-quarter revenue would take a hit from weaker refining profits and lackluster performance across its divisions.

In a regulatory filing, Exxon Mobil indicated that refining margins could negatively impact profits by $300 million to $700 million compared to the third quarter.

Additionally, timing effects are estimated to reduce earnings in its energy products division by $500 million to $900 million.

Meanwhile, Shell (SHEL) announced a $1.3 billion charge in the fourth quarter due to permits in Germany and the United States. The company also warned that earnings from its integrated gas division would be “significantly lower” than in the third quarter.

Oil Prices Extend Gains

Oil prices rose on Wednesday, building on the previous session’s rally, after U.S. industry data pointed to a sharp drop in crude inventories and OPEC production showed a decline.

Data from the American Petroleum Institute (API), released on Tuesday, indicated that U.S. crude inventories fell by over four million barrels in the week ending January 3. This far exceeded forecasts for a decline of 250,000 barrels.

If confirmed by official data, this would mark the second consecutive week of inventory drawdowns, attributed to increased demand during the holiday season.

Separately, Reuters data revealed a decline in OPEC oil production for December. Maintenance activity in the United Arab Emirates offset higher production in Nigeria, contributing to the production dip.