Stock futures tumble amid hawkish Fed, signs of tough inflation

news7f02/17/2023

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Stock futures tumble amid hawkish Fed, signs of tough inflation

U.S. stocks fell on Friday morning as investors pointed to continued risk-aversion, with underperforming technology stocks, higher bond yields and a stronger dollar.

The S&P 500 Index (^GSPC) fell 0.6%, while the Dow Jones Industrial Average (^DJI) decreased by 0.5%. The tech-heavy Nasdaq Composite (^IXIC) decreased by more than 1%. Early in the session, the indexes headed for their lowest close since January.

Technology stocks underperformed, while media services and consumer discretionary were the worst performers.

The yield on the benchmark 10-year US Treasury note rose to 3.88% on Friday morning. The Dollar Index is up 0.4% to trade at $104.32. Energy traded weaker, with benchmark US WTI crude falling about 3.5% to around $75.80 a barrel.

Stocks continue to sell off from Thursdayas investors analyze economic data hotter than expected and Fedpeak hawkish.

On the macro front on Friday, January import prices fell for a seventh straight month, down 0.2%, as lower fuel prices offset higher non-fuel prices, The Department of Labor said on Friday.

Richmond Federal Reserve Bank President Thomas Barkin continued to take a more hawkish tone from officials, saying the labor market remained “quite hot” and that “the risks of overemployment outweigh the risks of overemployment.” do too little.” Federal Reserve Governor Michelle Bowman added more to that sentiment by signaling that the central bank will need to move on. interest rate increase until inflation reaches the 2% target.

Data released on Thursday showed supplier prices rose with a monthly gain of 0.7%, well above the 0.4% expected by economists. With the consumer price index edging higher for the month, recent data has raised concerns that the central bank will remain hawkish, pushing rates higher and keeping rates there for longer. .

That narrative was boosted after comments by two other Fed officials on Thursday showed bigger interest rate increase this month in the context of difficult inflation.

Jim Reid and colleagues at Deutsche Bank wrote in a note early Friday morning: “Following those comments, investors have turned to prices with increasing probability that the Fed may choose to raise more than 25 basis point at the next meeting in March.” .

Economists at Bank of America forecast interest rates to rise a quarter of a percentage point in March and May, after which there will be a pause.

“Rebound inflation and steady employment mean the risks to this outlook are too one-sided for our liking,” the team at Bank of America wrote. “March and May rate hikes are highly likely and the Fed may have to raise rates further if inflation, job growth and consumer demand do not ease.”

Meanwhile, there is a new debate about the “hard” or “soft” landing scenario among investors – the “no landing” outcome. The scenario will lead to economic growth, while inflation is not controlled. Either story will eventually lead to a “landing”, Alexandra Semenova of Yahoo Finance reports.

During stock moves, DraftKings stock (DK) rose 15% at the open, the highest since August after the online sportsbook reported fourth quarter revenue was $855.1 million, higher than analyst expectations of $798.6 million. Active monthly payers rose 31% to 2.6 million, well above the 2.5 million forecast.

Application materials (amateurs) shares rose after the semiconductor supplier beat Wall Street expectations for the current period and its first fiscal quarter.

Visual machine (LUNR) shares traded lower on Friday when the company closed its SPAC merged with Inflection Point Acquisition this week. The company aims to be the first private American venture to set foot on the moon.

DoorDash (DASH) shares rose after the company reported a 40% increase in revenue to $1.8 billion year over year. Total orders also hit a higher level of 467 million, up 27% year-over-year. The delivery company also announced a share buyback program and gave a positive forecast for the current quarter.

Shares of Moderna (mRNA) sank Friday morning after the company’s flu vaccine research failed to meet one of its goals.

Finally, Deere & Company (DE) rose after the agricultural machinery giant beat expectations, with $11.4 billion in equipment sales and earnings of $6.55 a share. The company is also projecting their net income in 2023 to be between $8.75 billion and $9.25 billion.