U.S. stock futures were sharply lower on Thursday after Wall Street posted its biggest one-day drop in nearly two years, as global markets languished under pressure from soaring inflation, slowing growth and signals from aggressive central banks to raise interest rates.
A string of warnings from blue-chip retailers including Target also sent stocks tumbling (TGT) – Get Target Company Report and Walmart (WMT) – Get the Walmart Company Report, rising fuel and labor costs, and an untimely inventory build will weigh on near-term margins. The country’s two largest retailers both suffered their biggest one-day declines since 1987 this week, with Target losing about a quarter of its value in yesterday’s carnage.
Those moves, along with bets that the Federal Reserve will accelerate interest rate hikes, put the S&P 500 on track for its biggest weekly drop in more than a decade and its second-worst start to any trading year in 95 trading days since 1932.
The Fed said it would not hold back from raising interest rates until there was “clear and compelling” evidence that inflation was slowing, based on comments from Fed Chairman Jerome Powell earlier this week.
According to CME Group’s FedWatch tool, interest rate traders still see an 85% chance of a 50 basis point rate hike next month and an 84.7% chance of a similar move in July, even with the benchmark 10-year yield in overnight trading hours Declining to 2.832% – down from around 3.19% at the start of last week – the dollar index was down 0.24% at 103.55 against a basket of six global currencies in European morning trade.
The VIX, the market’s main volatility gauge, was also up, rising 22.2% to 31.88 in early trade, signaling another day of sharp volatility on Wall Street.
Ryan Belanger, managing director and founder of Boston-based Claro Advisors, said: “The stock market will remain in purgatory until the Fed puts out the inflation wildfire with higher interest rates, cooling consumers’ appetite for goods, services, homes and hotel rooms. need.”
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“Investors should get used to the sharp declines and gains in stocks that are common in times of great uncertainty,” he added. “We expect the stock market to be near or in bear market territory in the coming months, creating a dismal A range-bound market will test the will of many investors.”
On Wall Street, futures tied to the Dow Jones Industrial Average opened down 270 points, while futures tied to the S&P 500 are down 18.2% this year and are expected to drop 34 points. Futures tied to the Nasdaq are eyeing a 110-point opening drop , sending the tech-focused benchmark index down about 30% so far this year.
In terms of individual stocks, Cisco Systems (CSCO) – Get Cisco Systems, Inc. Reports The world’s largest computer networking equipment maker posted lower-than-expected third-quarter sales and forecast weaker profits in the near term, in part because supply chain disruptions hampered the delivery of key components, sending its shares down 11%.
BJ’s Wholesale Club (BJ) – Get BJ’s Wholesale Club Holdings, Inc. reportHowever, the company’s shares rose 5% after reporting stronger-than-expected first-quarter earnings while reining in higher costs led to profit updates from retail giants Target and Walmart.
Boeing (BA) – Get Boeing Reports Shares fell 0.5% but found support on news of a major aircraft order worth about $6.25 billion from British Airways parent IAG.
Under Armour (UAA) – Get Under Armour, Inc. Class A Report Shares in the sportswear group fell 3% in premarket trading after the sportswear group said CEO Patrick Frisk would step down at the end of the month.