After a severe sell-off on Wall Street, U.S. stock futures began little changed Thursday evening, as doubts about the Federal Reserve’s capacity to reduce inflation while sustaining steady economic growth resurfaced.
Contracts on the S&P 500 moved sideways. The index had dropped 3.6 percent during the regular trading day as technology stocks underperformed. The Nasdaq fell 5%, its worst day since June 2020, while the Dow plunged more than 1,000 points.
The stock market’s rapid swing from gains to losses on Wednesday to Thursday happened as investors assessed the implications of the Federal Reserve’s latest telegraphed monetary policy path forward. On the long end of the yield curve, Treasury yields climbed on Thursday; the benchmark 10-year yield rose above 3.03 percent. The continued rise in Treasury yields and borrowing costs has weighed on growth and technology firms; as we know, these sectors are strongly valued based on their future earnings potential.
Investors also expect Friday’s monthly employment data; it should support the Fed’s conclusion that the labor market in the United States remains extraordinarily tight. Nonfarm payrolls are estimated to have increased by 380,000 in April; a slight drop from March but still a strong month of employment creation. In addition, the unemployment rate predicts to fall to 3.5 percent, matching the lowest level since 1969 in February 2020.
Noteworthy Stats
Twitter (TWTR) — Twitter gained 1.5 percent in premarket trading after Elon Musk revealed $7.2 billion in financial pledges for his proposed acquisition of the firm. According to an SEC filing, Oracle co-founder Larry Ellison and financier Ron Baron are among those pledging funds.
SeaWorld (SEAS) – The theme park operator’s stock jumped 1% in premarket trading after reporting a smaller-than-expected quarterly loss and revenue that exceeded projections as attendance surpassed pre-pandemic levels.
Spirit Airlines (SAVE) — Spirit announced an adjusted quarterly loss of $1.60 per share, more than the 58-cent loss expected by Wall Street. At the same time, revenue was also lower than expected. In premarket trading, Spirit shares fell 1.4 percent.
