U.S. stock futures stumbled Thursday morning as optimism around easing inflation faded and investors analyzed a slew of corporate earnings.
Futures contracts linked to the S&P 500 (^GSPC) fell 0.6%, while contracts on the Dow Jones Industrial Average (^DJI) fell by the same percentage, or about 190 points. Futures on the technology-focused Nasdaq Composite (^IXIC) were down 0.7%.
A recent uptrend in equity markets has run out of steam after strong October retail sales data dashed hopes of a change in central bank policy, recently revived by a series of reports on the lighter inflation. A shortfall from Target also weighed on sentiment in Wednesday’s session, with the company citing inflation and a deteriorating economic backdrop ahead of the key holiday shopping season.
Other industry peers fared better over the period.
Macy’s (M) shares jumped more than 9% before the opening after the department store giant beat estimates and raised its full-year profit forecast, buoyed by strong demand in the areas of luxury of his activity. Kohl’s (KSS), meanwhile, beat earnings expectations but withdrew its full-year outlook due to “significant” macroeconomic headwinds and the unexpected transition of its chief executive. Shares fell 4% premarket.
Shares of Bath & Body Works (BBWI) soared nearly 22% in extended trading on Thursday after the personal care and home fragrance maker raised its full-year earnings outlook. Retailers Walmart (WMT), Lowe’s (LOW), Home Depot (HD) all beat analysts’ estimates.
Elsewhere, as the earnings season hits its home stretch, Nvidia (NVDA) CEO Jensen Huang said strong demand for the chips will help the company weather potential economic challenges – enough insurance to offset the losses from its gaming business. Shares were up about 1.5% before the open.
Machinery maker Cisco Systems (CSCO) saw its shares rebound 4% in the pre-market hours after the company announced a positive earnings outlook and said it was cutting staff and offices.
Meanwhile, in Washington DC, Republicans won a majority in the House of Representatives on Wednesday, resulting in a shared control of the U.S. Congress — a positive sign for investors as stocks have always performed better in tough times. political deadlock.
Still, strategists claimed that inflation and economic conditions remain at the center of market concerns. Seema Shah, head of global strategy for asset management, said the outcome was expected to be “largely unrelated to the overall market outlook”.
“Instead, it is historically high inflation, the Fed’s response to inflation and the resulting risk of recession, coupled with key structural policy decisions, that will determine the direction of the market.”
On that front, investors are expecting a prolific day from Fedspeak, with several members of the Federal Reserve set to make public remarks across the country on Thursday.
San Francisco Federal Reserve Chair Mary Daly said in an interview with CNBC on Wednesday that a rate pause is currently not an option while indicating that the fed funds rate could reach the 4 range, 75% to 5.25%.
Federal Reserve Governor Christopher Waller said Wednesday that recent economic data made him more comfortable with the possibility of a 50 basis point hike at the central bank’s December meeting.
Goldman Sachs, while forecasting a 0.50% rise next month, added an additional quarter point in May 2023 to its outlook, raising its expectation for the top federal funds rate to 5-5.25%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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