China's Fed insiders, oil reserves tapped, Fed decision imminent: Wednesday's 5 things to know
Traders will be looking at 2Q results from Boeing, T-Mobile and Meta as well as Ford, Qualcomm and more on Wednesday
Here are five key things that could impact Wednesday's trading.
CHINA’S FED INSIDERS: The Chinese government has targeted the Federal Reserve in an effort to undermine American monetary policy since at least 2013, according to a report released Tuesday by Republicans on the Senate Homeland Security and Government Affairs Committee.
The report detailed the actions of several Federal Reserve employees known as the "P-Network," whose foreign travel patterns and academic backgrounds raised concerns internally.
One of these employees was detained four times during a 2019 trip to Shanghai as Chinese officials "threatened the individual’s family unless the individual provided them with economic information and assistance."
FED PREPARES ANOTHER MEGA-SIZED RATE HIKE, RISKING DEEPER ECONOMIC DOWNTURN
Since 2013, the Chinese government has reportedly targeted employees at the Federal Reserve, a Senate committee's report released Tuesday says. (AP Photo/Patrick Semansky, File / AP Images)
Other Federal Reserve employees also had "close ties" to the People’s Bank of China, Chinese academic organizations and the state-owned Xinhua News Agency, according to the report.
One employee who had "continuous contacts with Chinese nationals" attempted "to transfer large volumes of data from the Federal Reserve to an external site." Another employee transferred "modeling code" to a Chinese University tied to China's central bank.
The Federal Reserve's inability to counter China's "long-running and brazen" actions is a national security threat, the Senate report said.
OIL RESERVES TAPPED: The White House announced Tuesday that the Department of Energy will be issuing a notice to sell 20 million more barrels of oil for the Strategic Petroleum Reserve as part of the Biden administration's effort to bring gas prices down.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| USO | UNITED STATES OIL FUND - USD ACC | 71.04 | -0.59 | -0.82% |
| CVX | CHEVRON CORP. | 162.21 | +0.28 | +0.17% |
| XOM | EXXON MOBIL CORP. | 117.83 | -0.23 | -0.19% |
This makes the fifth such sale that President Biden has authorized. The White House continued to blame "disruptions posed by Russia’s invasion" for the high prices while claiming that the Biden administration's actions are making a tremendous difference.
While gas prices are down significantly since a recent national average price of more than $5 per gallon in June, the average as of Tuesday was still $4.327, compared to $3.156 from one year ago, and approximately $2.39 when Biden first took office in January 2021.
Republicans slammed the White House after it was made known that millions of barrels from previous sales of the Strategic Petroleum Reserves were being sent to European and Asian countries, including China.
"The American people deserve answers as to why our emergency energy reserves are being sent to foreign adversaries like the Chinese Communist Party, compromising our energy security and national security," House Energy and Commerce Committee Ranking Member Cathy McMorris Rodgers told Fox News Digital in a statement.
FED DECISION IMMINENT: The Federal Reserve is widely expected to raise the Federal Funds rate by three-quarters of a percentage point to a range of 2.25%-2.5%. It would be the central bank’s second consecutive 75-basis point rate hike (June saw the first 75 bps hike since November 1994), following a half-point hike in May and a quarter-point increase in March. Prior to that the Funds rate had been in a 0%-0.25% range following two emergency rate cuts in March 2020 in response to the global pandemic.
FED'S UNITED FRONT ON INTEREST RATES MAY SOON BE TESTED
The Federal Reserve’s preferred measure of inflation, the year-over-year change in core personal consumption expenditures, retreated slightly to 4.7% in May. It was the third month of slowing growth, down from a 39-year high of 5.3% in February, but still significantly above the Fed’s 2% inflation target. The June reading, out Friday morning, is expected to hold steady at 4.7%.
Jerome Powell, seen here speaking during the National Association of Business Economics (NABE) economic policy conference in Washington, D.C. (Valerie Plesch/Bloomberg via Getty Images / Getty Images)
BIG TICKET ITEM, JUNE PENDING HOME SALES REPORTS DUE: The Census Bureau is expected to release a report at 8:30 a.m. ET Wednesday saying new orders for manufactured big-ticket items fell half a percent in June from the previous month, after rising a seasonally adjusted 0.8% in May. If you factor out the transportation component, orders are anticipated to rise 0.2%, well below May’s increase of 0.7%. Orders for core capital goods, a closely watched proxy for business spending, are seen climbing 0.2% in June, also trailing May’s 0.6% spike.
At 10 a.m. ET, the National Association of Realtors is out with its index of pending home sales for June. Economists surveyed by Refinitiv are looking for a decline of 1.5%, the seventh drop in the last 8 months as buyers struggle with soaring borrowing costs and record-high prices. That would leave the index at its lowest level in more than two years (since April 2020). Recall that a sale is pending when a contract to buy a previously owned home has been signed but not yet closed.
The National Association of Realtors will release its index of pending home sales for June on Wednesday, July 27, 2022 at 10 a.m. ET. A home is seen pictured with a "House for sale" sign out front. (Tim Boyle/Getty Images / Getty Images)
REPORTS RELEASE CONTINUES: Another busy day of earnings is coming up tomorrow. In the morning, we’ll hear from Boeing. The aerospace giant is the only Dow member to report on Wednesday. Other names to watch include health insurer Humana, wireless carrier T-Mobile US, pharmaceutical powerhouse Bristol-Myers Squibb, packaged food processor Kraft Heinz and paint manufacturer Sherwin-Williams to name just a few.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 149.27 | +5.86 | +4.09% |
| HUM | HUMANA INC. | 298.48 | +2.86 | +0.97% |
| TMUS | T-MOBILE US INC. | 238.28 | +1.70 | +0.72% |
| BMY | BRISTOL MYERS SQUIBB CO. | 58.87 | +0.64 | +1.10% |
| KHC | THE KRAFT HEINZ CO. | 31.81 | +0.72 | +2.32% |
| SHW | THE SHERWIN-WILLIAMS CO. | 388.30 | +4.98 | +1.30% |
| META | META PLATFORMS INC. | 559.14 | -3.95 | -0.70% |
| F | FORD MOTOR CO. | 11.18 | +0.37 | +3.42% |
| QCOM | QUALCOMM INC. | 156.79 | +1.33 | +0.86% |
| MOH | MOLINA HEALTHCARE INC. | 290.79 | -5.28 | -1.78% |
| PPC | PILGRIMS PRIDE | 51.71 | -0.54 | -1.03% |
| URI | UNITED RENTALS INC. | 849.32 | +8.58 | +1.02% |
Facebook parent Meta Platforms will take the earnings spotlight after the closing bell. The company is expected to say 2Q earnings per share tumbled 28% from a year ago to $2.59, with revenue slipping half a percent to $28.94 billion.
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Other names to watch Wednesday afternoon include automaker Ford Motor, wireless chip manufacturer Qualcomm, health insurer Molina Healthcare, poultry processor Pilgrim’s Pride and equipment rental giant United Rentals among many others.