U.S. stock index futures fell Friday as investors sought safety in bonds and the U.S. dollar in the wake of interest rate rises by international central banks to combat inflation that some fear could hamper economic growth.
How are stock-index futures trading?
- S&P 500 futures ES00, -0.77% fell 34.50 points, or 0.8%, to 4,388.
- Dow Jones Industrial Average futures YM00, -0.57% fell 202 points, or 0.6%, to 34,008.
- Nasdaq-100 futures NQ00, -1.10% slid 167 points, or 1.1%, to 15,043.
On Thursday, the Dow industrials DJIA, -0.01% fell 4.81 points, or less than 0.1%, to close at 33,946.71. The four-day slide is the blue-chip gauge’s longest losing streak since a five-day drop that ended on May 25, according to Dow Jones Market Data. The S&P 500 SPX, +0.37% rose 16.20 points, or 0.4%, to end at 4,381.89. The Nasdaq Composite COMP, +0.95% gained 128.41 points, or 1%, finishing at 13,630.60.
What’s driving markets
Concerns that interest rate rises by central banks to lower inflation might harm global economic growth were in focus again on Friday, analysts said, after interest rate rises in the U.K., Switzerland, Norway and Turkey on Thursday which followed rate rises in Canada and Australia in the past month.
Data released on Friday also showed business activity in the eurozone losing momentum in June, according to a purchasing managers survey.
While the Federal Reserve opted to leave interest rates on hold in June, Chair Jerome Powell reiterated in Congressional testimony this week that senior Fed officials strongly support hiking rates “a couple of times” later this year.
“The market is too confident that the Federal Reserve can engineer a soft landing and it would be wise for investors to reduce exposure to stocks,” said Ryan Belanger, founder and managing principal at Claro Advisors, in emailed commentary.
With U.S. stocks on Friday set to snap the longest streak of weekly gains since 2019, jitters were manifesting in other markets as the U.S. dollar DXY, +0.44% rose 0.7% against a basket of major currencies.
The S&P 500 had climbed for five straight weeks, its longest such winning streak since November 2021, Dow Jones Market Data show. Meanwhile, the technology-heavy Nasdaq saw an eighth straight weekly advance to mark its longest stretch of gains since March 2019.
The yield on the 10-year Treasury note TMUBMUSD10Y, 3.698% fell five basis points to 3.744%. Yields on 10-year U.K. gilt TMBMKGB-10Y, 4.256% and 10-year German bunds were down by 10 basis points or more. Crude prices CL.1, -2.56%, which are sensitive to expectations for the global economy, fell 1.6% to $ 68.49 a barrel.
However, U.S. Treasury Secretary Janet Yellen said recession struck an upbeat tone Friday when she said in an interview with Bloomberg that recession risks in the U.S. have faded “because look at the resilience of the labor market, and inflation is coming down.”
Neil Wilson, chief market analyst at Finalto, said in emailed comments to clients that Yellen is “missing the point” as the global economy is “entering a new phase” of stagnation.
“Inflation is yesterday’s story — apart from in the U.K. — and we now enter the stagnation and recession phase. The risk regime is shifting from inflation to growth. That is not to say that inflation remains elevated — we are in a new inflationary paradigm, but don’t think central banks will throw every last basis point at getting core inflation down from 4% to 2%,” he said.
U.S. investors are due to receive some fresh economic data on Friday, with the S&P flash U.S. services and manufacturing purchasing managers index for June due at 9:45 a.m. Eastern. Cleveland Fed President Loretta Mester is expected to speak at 1:40 p.m.
Companies in focus
- 3M Co. shares MMM, -1.02% rose 3% after the materials and chemicals company, and Dow Jones Industrial Average DJIA, -0.01% component, offered $ 10.3 billion to settle claims it was responsible for so-called “forever chemicals” in drinking water.
- Virgin Galactic Holdings Inc. SPCE, -6.83% dropped 15% in premarket trading after the space-tourism company said late Thursday in a filing it’s seeking to raise $ 400 million to scale up its business and improve its fleet.