MARKET WRAPS

Watch For:

EIA Weekly Petroleum Status Report; Final 1Q Economic Growth Figures

Opening Call:

Stock futures struggled for momentum on Wednesday ahead of a summit of top central bankers where investors will closely watch for signals of the Federal Reserve's pathway on monetary policy.

Markets remain under pressure over whether the Fed will move more aggressively to fight multidecade high inflation by hiking interest rates--a pathway of tighter monetary policy that risks spurring a recession.

This narrative has been top of mind in recent months and will be in the spotlight again Wednesday as central bankers meet at a summit in Portugal. Powell will deliver remarks at 9 a.m. ET, alongside counterparts from the European Central Bank and the Bank of England at the forum in Sintra.

"As ever, markets will be dissecting [Powell's] every word, looking for hints in this case, that the Fed is wavering on its hawkish bias as recessionary fears rise," said OANDA's Jeffrey Halley. "They are likely to be disappointed, but it should be good for some intraday [volatility]."

Overseas, the pan-European Stoxx 600 lost 0.9% and Hong Kong's Hang Seng Index tumbled 2% as Asian bourses followed Wall Street's downbeat performance in the last session.

A final reading for gross domestic product in the first quarter is set to go out at 8:30 a.m. ET, while earnings are due from General Mills and Bed Bath and Beyond.

Stocks to Watch:

Pinterest climbed 4.5% in premarket trading. The company said its chief executive is stepping down and a Google commerce executive is taking over the top job. Carnival fell 6%, accelerating its two-day decline spurred by a series of price target cuts by equity research analysts.

Read Barrons.com: Why Wall Street Expects Robinhood to Be Acquired

Economic Insight:

Global GDP is expected to grow 1.7% in 2023 as aggressive monetary policy tightening and reduced consumer purchasing power weigh on activity, said Wells Fargo economists.

The probability of a recession is increasing in many major economies, particularly in the U.S., and contagion effects will result in economic contractions across the G10 economies and emerging markets.

"As hawkish as most central banks have been this year, we now believe some central banks could look to unwind tighter monetary policy in the second half of 2023," Wells Fargo said.

A recession in the U.S. and the U.K. should result in the Federal Reserve and the Bank of England lowering interest rates, the economists added.

Forex:

Wednesday's U.S. headline and core PCE deflator readings, as well as comments by the heads of central banks could lift the dollar, said ING.

"High month-on-month [PCE] readings are expected for headline and core--0.7% and 0.4%--and any upside surprise could see U.S. rates and the dollar nudge higher."

The buck may also benefit from central bank comments given that "the pricing of U.S. rates is still the most subject to upside risks."

Bonds:

The yield on the benchmark 10-year Treasury note edged down to 3.134% from 3.206% on Tuesday, reversing direction after three straight days of rises. European government bonds rallied, with Italy's 10-year yield declining to 3.485% from 3.514% the day before.

"Investors were getting a little concerned that we would have a replay of the sovereign debt crisis. The ECB has reaffirmed that this is not going to be the case, they have a policy tool kit and can address that," said Salman Baig, a multiasset investment manager at Unigestion.

The market is positioning for more information about the ECB's new "anti-fragmentation" tool, aimed at addressing uneven financial conditions across the bloc, ahead of Ms. Lagarde's speech on Wednesday, Baig said.

Energy:

Oil prices edged higher in Europe, erasing earlier session losses, as concerns build over the ability of OPEC producers to increase supply.

OPEC members, particularly leading producers Saudi Arabia and the U.A.E., are being seen as increasingly unlikely to be able to increase supply to compensate for lost Russian barrels.

"The market's perception that OPEC+ is struggling to meet existing supply commitments, and even more so to expand supply is supporting prices," said CBA.

The cartel's technical committee meets later Wednesday ahead of a full ministerial meeting Thursday.

Metals:

Metals were lower in early European trading, with copper down 1%, as sentiment was hampered by a lack of optimism about the economy from consumers.

"Inflation worries continue to be propagated around," said Marex. It reckons a rate hike from the ECB is likely and said investors aren't that convinced "a global recession can be avoided altogether."

Other News:

China's daily crude steel output rate will need to fall from 3.12 million tons in May to an average of just below 2.78 million tons from June to December in order to meet Beijing's goal to lower annual steel production, said Commonwealth Bank of Australia.

While it is unlikely China will need to curb output toward end-2022 with the same vigor experienced toward the end of last year, as it rushed to significantly rein in production, "some steel output discipline is required to meet the NDRC [National Development and Reform Commission] target, especially if China's steel output rates remain elevated for a few more months," CBA said.

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Higher diesel and electricity costs on Australia's east coast are pressuring a number of energy-intensive mining operations and could push some companies to accelerate their energy-transition plans, said Macquarie analysts.

Rio Tinto earlier this month called for proposals to develop large-scale wind and solar power in Queensland state, where it runs aluminum assets, the analysts noted. They also highlighted other recent renewable-power supply deals, including one at BHP's Olympic Dam copper operation in southern Australia, which is due to begin next month.

TODAY'S TOP HEADLINES

Tesla Lays Off Some Staff in Closing San Mateo, Calif., Office

Tesla Inc. is closing one of its Silicon Valley offices and laying off about 200 people there as part of the electric vehicle maker's plans to trim its head count amid rising costs, according to people familiar with the matter.

The company told employees Tuesday that it was closing a San Mateo, Calif., office, which had been home to staff who worked to help improve Tesla's advanced driver-assistance system known as Autopilot, the people said. About 200 people, or more than half of the staff in that office, were told they were being let go.

Beyond Meat to Offer Sliced-Steak Product, CEO Ethan Brown Says

CHICAGO-Beyond Meat Inc. is preparing to launch a sliced-steak product, expanding the company's lineup of plant-based meat alternatives as it works to boost languishing sales.

The California-based company plans to launch the steak product this year in retail stores and eventually in restaurants, Chief Executive Ethan Brown said Tuesday at The Wall Street Journal's Global Food Forum. The sliced steak is intended to replicate whole pieces of meat, versus the company's existing products that mimic sausages, tenders, burger patties and meatballs.

FTC Accuses Walmart of Letting Scammers Use Its Money-Transfer Services

The Federal Trade Commission sued Walmart Inc. on Tuesday, alleging the retailer allowed its money-transfer services to facilitate fraud.

The complaint, filed in U.S. District Court for the Northern District of Illinois, alleges that Walmart's money-transfer service was used to facilitate scams such as impersonating the Internal Revenue Service or other government entities that request money, the FTC said. Between 2013 and 2018 over $197 million in payments sent or received at Walmart were the subject of fraud complaints, it said. The agency said Walmart was aware that scammers were using its systems and didn't do enough to stop it.

Delta Lets Travelers Change Flights for Free Over Fourth of July Weekend

Nervous about flying during a busy holiday weekend? Delta Air Lines Inc. has an alternative: don't.

Delta is allowing customers to change flights for free, letting them rebook trips before or after potentially challenging weekend days without paying a higher last-minute fare or a change fee.

Grubhub CEO Says Sale Isn't Imminent, as Owner Seeks a Partner

CHICAGO-Grubhub Chief Executive Adam DeWitt said company parent Just Eat Takeaway.com NV hopes to find a strategic partner to invest in the U.S. online ordering company, though an outright sale isn't off the table.

In some of his first public remarks about the company since Just Eat said in April it would consider selling Grubhub, Mr. DeWitt said no sale was imminent and that Just Eat was exploring options to strengthen Grubhub as its U.S. division encounters challenges.

Disney Board Votes to Renew CEO Bob Chapek's Contract

The board of Walt Disney Co. said it has voted unanimously to renew Chief Executive Bob Chapek's contract for another three years.

The board's chairman, Susan Arnold, said in a statement released Tuesday that while the company was "dealt a tough hand by the pandemic," Mr. Chapek "not only weathered the storm but emerged in a position of strength."

P&G, Target to Cover Employee Travel for Abortions

Procter & Gamble Co. and Target Corp. said they would cover travel expenses for employees who can't access abortions near where they live, joining other companies that have taken the step after the Supreme Court overturned the constitutional right to abortion.

P&G, unlike many of the technology and banking giants that had previously announced similar policies, is based in a Midwestern state with an abortion ban. A federal judge in Ohio issued an order Friday allowing the state's six-week ban to take effect. A few other big employers in Ohio, including grocer Kroger Co., have also said they would provide benefits for workers who need to travel for abortions.

SEC Includes Novel Probe Into Lawyers' Actions in EY Settlement

WASHINGTON-Wall Street's top cop is putting the screws to one of the world's biggest audit firms-and going after its lawyers, too.

As part of a $100 million enforcement action announced Tuesday against Ernst & Young, the Securities and Exchange Commission demanded the firm undertake a separate, follow-up investigation into the actions of its own lawyers and managers. The SEC accused EY of misleading regulators about an internal report of cheating on required ethics exams, and suggested the firm's lawyers and other executives were aware of the tip but failed to reveal it.

Analysis: Hong Kong, Chinese Markets Deepen Ties With ETF Connect

Chinese and Hong Kong regulators' decision to allow mutual trading of exchange-traded funds from next week not only expands investors' access to different asset classes but also signals Beijing's move to further strengthen financial linkages with one of Asia's most active stock exchanges.

The inclusion of eligible ETFs in the stock-trading link between the markets could improve liquidity in the overall market and allow investors to pick thematic or sector ETFs to gain exposure to Chinese industries such as new-energy vehicles and semiconductors, analysts said.

U.S. Expands Plan for Monkeypox Vaccines in Effort to Curb Outbreak

U.S. health officials said they are significantly expanding efforts to vaccinate people against monkeypox, a disease recently confirmed in more than 300 people around the country and thousands more in countries where it isn't typically seen.

The Centers for Disease Control and Prevention is now recommending vaccines for people with presumed exposure to the viral illness and not just confirmed exposure, federal health authorities said Tuesday. This latest recommendation also covers men who have sex with men who recently had multiple sex partners in a venue where monkeypox was known to be or in an area where the virus is spreading.

Citadel's Ken Griffin Loses $50 Million Bet in Billionaire Bout for Illinois Governorship

CHICAGO-Hedge-fund billionaire Ken Griffin lost his $50 million bet in the Illinois Republican primary for governor Tuesday after the suburban mayor he helped lift out of relative obscurity lost to a staunch conservative who benefited from Democratic advertising.

Darren Bailey, a southern Illinois farmer and state senator endorsed last weekend by former President Donald Trump, was declared the GOP winner by the Associated Press. He will face Democratic Gov. J.B. Pritzker, a billionaire and the nation's wealthiest elected official, on November's ballot.

Colombia Peace Commission Calls For Overhaul of Army and U.S.-backed War on Drugs

BOGOTA, Colombia-A panel investigating atrocities during Colombia's epic civil war called for overhauling the country's armed forces and critiqued the U.S.-backed war on drugs as part of its final report. The president-elect said he would consider the recommendations.

The report, made public Tuesday by a truth commission created as part of the government's 2016 peace pact with Marxist rebels, offered the most comprehensive study yet of the half-century conflict that has cost some 260,000 Colombian lives and forced millions to flee the war-battered countryside.

Lack of Progress on Deforestation Puts Net-Zero Targets at Risk, Study Says

Many big companies working in agriculture and other sectors that drive deforestation won't hit their climate targets without immediate action to protect forests, according to a study published on Tuesday.

The study, commissioned by the United Nations-affiliated Race to Zero climate campaign, analyzed the environmental programs of 350 companies in the forestry, land use and agriculture sectors that have a major impact on the world's forests. It found that 148 of those companies have committed to net zero but judged that only nine were making strong progress on curbing deforestation.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

Corus Entertain 3Q

Field Trip Health 4Q

mdf commerce 4Q

Shaw Commun 3Q

TECSYS 4Q

Economic Indicators:

None scheduled

Expected Major Events for Wednesday

00:30/JPN: May Detailed Import & Export Statistics

05:00/JPN: Jun Consumer Confidence Survey

06:45/FRA: May Housing starts

08:00/GER: Jun Bavaria CPI

08:00/GER: Jun Brandenburg CPI

08:00/GER: Jun Hesse CPI

08:00/GER: Jun Baden-Wuerttemberg CPI

08:30/UK: May Capital issuance

08:30/GER: Jun North Rhine Westphalia CPI

09:00/GER: Jun Saxony CPI

11:00/US: 06/24 MBA Weekly Mortgage Applications Survey

12:00/GER: Jun Provisional CPI

12:30/US: 1Q Revised Corporate Profits

12:30/US: 1Q U.S. final growth figures for first quarter of 2022

14:00/US: May Metropolitan Area Employment & Unemployment

14:30/US: 06/24 EIA Weekly Petroleum Status Report

23:01/UK: May UK monthly automotive manufacturing figures

23:50/JPN: May Preliminary Industrial Production

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Wednesday

AMMO Inc (POWW) is expected to report $0.06 for 4Q.

Avid Bioservices Inc (CDMO) is expected to report $0.00 for 4Q.

Barnes & Noble Education Inc (BNED) is expected to report $-0.17 for 4Q.

Bed Bath & Beyond Inc (BBBY) is expected to report $-1.46 for 1Q.

BeyondSpring Inc (BYSI) is expected to report $-0.24 for 1Q.

Corus Entertainment Inc - Class B (CJR.B.T,CJREF) is expected to report $0.20 for 3Q.

Culp Inc (CULP) is expected to report $-0.50 for 4Q.

Duck Creek Technologies Inc (DCT) is expected to report for 3Q.

Elite Pharmaceuticals Inc (ELTP) is expected to report for 4Q.

Franklin Covey Co (FC) is expected to report $0.18 for 3Q.

General Mills (GIS) is expected to report $1.03 for 4Q.

MSC Industrial Direct Co Inc (MSM) is expected to report $1.74 for 3Q.

McCormick & Co (MKC) is expected to report $0.65 for 2Q.

MillerKnoll Inc (MLKN) is expected to report $0.44 for 4Q.

National Beverage Corp (FIZZ) is expected to report $0.41 for 4Q.

Neptune Wellness Solutions Inc (NEPT,NEPT.T) is expected to report for 4Q.

NovaGold Resources Inc (NG,NG.T) is expected to report $-0.02 for 2Q.

Patterson Companies (PDCO) is expected to report $0.48 for 4Q.

Paychex Inc (PAYX) is expected to report $0.79 for 4Q.

Portage Biotech Inc (PBT.U-L,PRTG) is expected to report for 1Q.

SMART Global Holdings Inc (SGH) is expected to report $0.38 for 3Q.

Schnitzer Steel Industries Inc (SCHN) is expected to report $2.23 for 3Q.

Shaw Communications Inc - Class B (SJR,SJR.A.V,SJR.B.T) is expected to report $0.33 for 3Q.

Tecsys (TCS.T) is expected to report $0.06 for 4Q.

UniFirst Corp (UNF) is expected to report $1.57 for 3Q.

mdf commerce inc (MDF.T) is expected to report for 4Q.

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ANALYST RATINGS ACTIONS

Banner Corp Raised to Buy From Neutral by Janney Montgomery Scott

Boston Beer Cut to Sell From Neutral by Goldman Sachs

eBay Cut to Neutral From Buy by UBS

Epizyme Cut to Market Perform From Outperform by Cowen & Co.

Fortinet Raised to Outperform From Market Perform by BMO Capital

JELD-WEN Cut to Equal-Weight From Overweight by Wells Fargo

Microchip Tech Raised to Buy From Hold by Stifel

Molson Coors Beverage Raised to Neutral From Sell by Goldman Sachs

Ovintiv Raised to Overweight From Neutral by JP Morgan

Portland General Electric Cut to Neutral From Buy by Mizuho

Shenandoah Telecom Cut to Market Perform From Strong Buy by Raymond James

Snowflake Raised to Buy From Hold by Jefferies

State Street Cut to Hold From Buy by Deutsche Bank

Universal Tech Institute Raised to Buy From Hold by Argus Research

Zendesk Cut to Equal-Weight From Overweight by Barclays

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

June 29, 2022 05:35 ET (09:35 GMT)

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