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North American Morning Briefing: Stock Futures Edge Lower After Dow's 550-Point Rally


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U.S. Existing Home Sales for May.

Opening Call:

Stock futures ticked down Tuesday as investors awaited comments from Federal Reserve Chairman Jerome Powell on the outlook for inflation and the labor market.

Futures tied to the Dow Jones Industrial Average slipped a day after the blue-chip index posted its biggest advance in more than three months. Contracts linked to the S&P 500 index also edged lower, while Nasdaq-100 futures pointed to technology stocks paring back gains at the opening bell.

Stocks have been volatile in recent days as investors looked for clues about how quickly the Fed will move to pull back its support of the economy, and whether the rebound may be stunted. Money managers' concerns about a spike in inflation and the prospect of higher rates have eased, but markets remain on edge.

Mr. Powell plans to tell Congress on Tuesday that job growth should pick up in coming months and temporary inflation pressures should ease as the economy continues to recover from the effects of the pandemic.

He is likely to take questions on the outlook for inflation and the labor market, which may offer fresh insights into the potential pace of interest-rate hikes and the easing of the Fed's bond-buying program.

"The market is in a very fragile, emotional state," said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. "It will be a rocky road, it will be bumpy and pronouncements from central bankers are going to get very quick, knee-jerk responses."

Money managers are reconciling themselves to the idea that stimulus measures will be pared back slowly, but not in the immediate future, he added. "There is still plenty of time for markets to get accustomed to [a rate increase]. It really doesn't feel like the beginning of the end just yet."

Existing home sales data, due at 10 a.m. ET, will offer a view into how the American housing market is faring. Economists expect that sales fell in May for the fourth consecutive month as record-high prices put off potential buyers.


The dollar may struggle to continue to build on its gains after last week's Fed meeting where policy makers predicted an earlier-than-expected timeframe for raising interest rates, UniCredit said.

Long-term U.S. bond yields "remain low," with the 10-year Treasury yield still "finding it difficult" to breach the 1.50% level, the bank said.

"We warned that if long-term yields continue to face difficulty in moving upwards in the near term, this would dent the post-FOMC USD rally, and this has already been visible in the dollar index (DXY) backpedaling to around the 92 threshold," UniCredit said.

The DXY index was last up 0.1% at 91.9750, having dropped down from a two-month high of 92.4050 reached Friday.


In bond markets, the yield on the 10-year U.S. Treasury note edged up to 1.502%, from 1.481% on Monday. The 30-year yield, which has been particularly volatile in recent days, ticked higher to 2.117% from 2.103% on Monday.

The Fed must walk a tightrope to navigate a successful end to an extremely accommodative stance, with key rates close to 0% and monthly asset purchases of $120 billion, said Olivier de Berranger, chief investment officer of La Financiere de l'Echiquier.

Economic growth is skyrocketing, the employment market is returning to normal and inflation is making a surprise return, he said.

"This therefore seems the ideal time for the Fed to start preparing financial markets for an end to its liquidity injections as the scars of the crisis for the U.S. economy fade," he said.

LFDE sees the Fed's meeting last week as a success despite the anticipation of an earlier start to rate rises by Fed members, de Berranger said.

The Fed's preferred plan and timing for tapering will become clearer in the coming months and Pimco expects an announcement on this could come as soon as the central bank's September meeting, said economists Tiffany Wilding and Allison Boxer.

"When the Fed does taper the monthly pace of purchases, it will likely follow a pre-planned, gradual path that takes roughly two to three quarters," they said.


Oil prices briefly hit their highest level in over two years before edging lower, as investors mulled the outlook for demand.

Brent initially rose above $75 in the Asian session for the first time since late-2018. Analysts said recovering demand should continue to support prices while suppliers keep taps only half-open.

"The ongoing demand outlook continues to outweigh the limited supply response amid cautious increases from OPEC+ and no still no agreement on the Iranian nuclear front," TD Securities said.

Copper prices inched higher as the metal stabilizes after concerns about demand prospects prompted several days of weakness. Three-month copper on the LME is up less than 0.1% at $9,182.50 a metric ton.

While losses appear to have halted, analysts remain concerned about the prospect of tightening monetary policy, slowing demand, and Chinese efforts to tamp down rising commodities prices.

"Underlying fundamentals are pretty much unchanged," said Malcolm Freeman, CEO of brokerage Kingdom Futures.

"There is still the real prospect of interest rate rises and the very fast bounce back from shutdown due to Covid is slowing."

Gold gained in early European trading ahead of Mr. Powell's testimony.



Resorts World to Open in Las Vegas as Business Rebounds After Covid-19

LAS VEGAS-The first new megacasino on the Strip in more than a decade, the $4.3 billion Resorts World, opens here this week as throngs of mostly maskless tourists indulge in the city's famous casinos once again.

Malaysia's Genting Group developed the 3,500-room hotel with 117,000 square feet of gambling space, 250,000 square feet of meeting space, a 5,000-seat theater where Celine Dion and Katy Perry begin residencies later this year and seven swimming pools overlooking the north end of the Strip. It is one of the biggest resort projects ever on the famed boulevard, similar in scope to the Bellagio or the Venetian.


Sanderson Farms Explores Sale

Poultry giant Sanderson Farms Inc. is exploring a sale, according to people familiar with the matter, as demand for chicken products rises.

Sanderson Farms has tapped Centerview Partners for advice on the potential sale and has attracted interest from suitors including agricultural investment firm Continental Grain Co., which owns a smaller chicken processor, the people said. The process may not result in a sale.


As U.S. Cruises Resume, Operators Outfit Ships With Contact-Tracing Tech

Cruise operators, whose U.S. operations have been suspended for more than a year amid the Covid-19 pandemic, are betting on technology to help keep passengers safe when they finally start leaving U.S. ports this summer.

Royal Caribbean Group, MSC Cruises and Virgin Voyages are among the cruise companies looking to smartphone apps, wearable devices, artificial intelligence and other technologies to keep passengers distanced, which lessens the chance of airborne transmission of the virus, and to provide contact-tracing if anyone does get sick.


Netflix Strikes Deal With Filmmaker Steven Spielberg

The acclaimed filmmaker Steven Spielberg has struck a multiyear deal to make movies for Netflix Inc., a huge get for the streaming giant as it faces increased competition for talent and content from deep-pocketed rivals such as Walt Disney Co. and Inc.

Under the terms of the deal, announced Monday by Netflix and Mr. Spielberg's Amblin Partners, the studio will make multiple new films for Netflix over the course of the agreement. The pact with Netflix doesn't affect Mr. Spielberg's long-term relationship with Comcast Corp.'s Universal Pictures where Amblin Partners is based.


The $213 Billion Meatpacking Industry Faces Stricter Oversight in Washington

The American meatpacking industry faces stricter oversight in Washington, as lawmakers and regulators push an overhaul of the $213 billion sector following complaints about meat companies' alleged influence over markets and farmers.

The U.S. Department of Agriculture is crafting new rules that would change how companies such as Tyson Foods Inc. and Pilgrim's Pride Corp. pay chicken farmers, while making it easier for farmers to pursue disputes against meatpackers, the agency said this month. On Capitol Hill, Republican and Democratic lawmakers have proposed legislation that would require beef processors like Cargill Inc. and JBS USA Holdings Inc. to buy more cattle on open markets, and set minimum regional prices.


Lordstown Motors Executives Sold Stock Ahead of Reporting Results and Before Troubles Came to Light

Several top executives at Lordstown Motors Corp. sold off chunks of stock in the electric-truck startup ahead of reporting financial results, according to regulatory filings disclosing the transactions.

Securities lawyers and accountants say such trades raise questions about the company's internal controls, especially in light of its recent troubles.


Work Flexibility, Popular With Employees, Is Hardly a Holy Grail

Many of today's workers have landed the upper hand when it comes to where and when they work. But no one should get too comfortable.

As demand roars back across the U.S. economy and workers are flush with pandemic savings, the little guy is suddenly wielding more power. Zillow, for example, has said it is allowing most employees to permanently work remotely, betting such a policy will yield the best talent.


Supreme Court Orders More Proceedings in Goldman Sachs Shareholder Suit

WASHINGTON-The Supreme Court on Monday rejected a plea from Goldman Sachs Group Inc. to raise the bar for shareholder lawsuits alleging fraud, but returned a class-action lawsuit against the company to a lower court for further proceedings.

(MORE TO FOLLOW) Dow Jones Newswires

June 22, 2021 06:07 ET (10:07 GMT)

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