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U.S. stock futures edged lower on Thursday, following the biggest single-session gain for tech stocks in more than two years, as investors scrutinize details of the Federal Reserve’s back-to-back jumbo rate hikes and prepare for a key second quarter growth reading before trading begins.
Fed Chairman Jerome Powell reiterated his commitment to tackling the fastest inflation in more than four decades when he explained the reason for the central bank’s second consecutive 75 basis point rate hike — after the Fed’s most aggressive tightening since the early 1980s — but sounded cautious about the state of the economy as a whole and seemed to leave the door open for smaller hikes, or even a pause in the rate hikes in the last months of the year.
The CME Group’s FedWatch now indicates a 71% chance of a 50 basis point rate hike in September and almost a 60% chance of a move of just 25 basis points at the next meeting in November.
“While another unusually large increase may be appropriate at our next meeting, that’s a decision that will depend on the data we get by then,” Powell told reporters in Washington. “We will continue to make our decisions meeting by meeting and communicate our thinking as clearly as possible.”
The comments, along with a more subdued assessment of broader growth, sparked a late-session rally on Wall Street that lifted the Dow over 400 points by the end of the session and was accompanied by the best single-day gain for the Nasdaq. since April 2020.
The rally also extended to Europe, where stocks were also boosted by a string of blue-chip regional earnings, including Shell, Volkswagen and Nestle, which included strong near-term earnings expectations.
Here in the US, investors will also go through another laden list of pre-market earnings, including updates from Pfizer (DFP) – Get the report from Pfizer Inc.Wed (M.K.R.) – Get the report from Merck & Company Inc.Comcast (CMCSA) – Get the Comcast Corporation Class A Common Stock ReportMasterCard (MY) – Get the Mastercard Incorporated report and Honeywell (HON) – Get the report from Honeywell International Inc.with Apple (AAPL) – Get the Apple Inc. report. crucial report of the June quarter, as well as that of Amazon (AMZN) – Get the report from Amazon.com Inc.are scheduled after market close.
Traders will also navigate the first reading of the Commerce Department’s second-quarter GDP, scheduled for 8:30 a.m. EST, as the national recession debate continues to rage.
The Atlanta Fed’s GDPNow tracker suggests the economy is contracting to a 1.2% level, while analysts expect a modest 0.5% gain in the three months to June.
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Most people, including investors, regard two consecutive quarters of negative GDP as the common definition of a recession. Historically, however, the National Bureau of Economic Research has been the final arbiter of a recession, which it defines as “a significant drop in economic activity that spreads through the economy and lasts for more than a few months.” .
Prior to that, benchmark Treasury bond yields continued to fall in overnight trade, recalibrating against the dovish tone of the Fed’s rate decision, with 2-year bonds trading at 2.982% and 10-year bonds at 2.792%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell 0.4% to 106.831, well off the 20-year high of 109.15 hit earlier this month.
On Wall Street, futures tied to the S&P 500 point to a 9-point opening bell drop while those tied to the Dow Jones Industrial Average are priced for a 40-point drop. Futures linked to the technology-focused Nasdaq point to a pullback of 77 points.
Metaplatforms (META) – Get the report from Meta Platforms Inc. The shares were the most active in premarket trading, falling 4.3% after the social media group posted its first quarterly revenue decline and indicated that competitive pressures and lower advertising sales would likely keep growth going. muted over the next few months.
Ford engine (F) – Get the Ford Motor Company report Shares, meanwhile, rose 6.7% after the automaker reported stronger-than-expected second-quarter earnings, while confirming its full-year profit forecast, even though it put on hold. warns of soaring costs.
Spirit Airlines (TO REGISTER) – Get the report from Spirit Airlines Inc. jumped 4% after shareholders voted against the discount carrier’s combination with Frontier Airlines (ULCC) – Get the report from Frontier Group Holdings Inc.paving the way for a $3.8 billion takeover by JetBlue (JBLU) – Get the report from JetBlue Airways Corporation.
Honeywell gained 0.7% after better-than-expected second-quarter results and an improved full-year sales forecast, driven in part by an impressive gain in the industry group’s commercial aerospace division.
Pfizer was also slightly higher after stronger-than-expected second-quarter profits, which included record revenue amid improved sales of its Covid treatments.
Apple shares edged down 0.5% ahead of the tech giant’s third-quarter earnings after the closing bell as investors focused on the group’s near-term revenue forecast and the impact of shortages of chips and production delays related to spring blockages in China.
