US stock futures rose on Friday morning, although major indexes are still targeting losses for the week after concerns about sustained inflation and the resilience of the US economy sparked further volatility in recent sessions.
Contracts for the S&P 500 and Nasdaq rose more than 1%, and Dow futures added more than 200 points during pre-trading sessions. The sharp upward move came after Federal Reserve Chairman Jerome Powell confirmed in an interview with public radio Marketplace on Thursday that there were two more interest rate increases of 50 basis points for the next two Fed meetings and that officials were not “actively considering” an aggressive increase of 75 basis points. His comments echoed what other Fed officials said this week.
Just a day earlier, the S&P 500 closed next to a bear market, typically defined as closing at least 20% of the recent record high. The index fell just over 18% from a record high from January 3 until Thursday’s close and is aimed at a weekly decline of 4.7% if levels remain until the end of Friday’s session.
The Dow Jones Industrial Average and Nasdaq Composite also targeted weekly losses of 3.6% and 6.4%, respectively, based on Thursday’s closing prices. Government bond yields rose and then declined this week, with the 10-year reference government bond yield hovering around 2.9% on Friday morning. Bitcoin prices have recovered to trade for more than $ 30,000 after reaching their lowest level since December 2020, as the decline in Luna’s prices further echoed in the wider cryptocurrency market.
Market movements this week coincided with two major reports of inflation, which were hotter than expected. The producer price index on Thursday showed an 11% annual rise in wholesale prices last month, slowing only slightly from its all-time high of 11.5% in March. And the Consumer Price Index, released earlier this week, showed an even higher 8.3% annual increase in prices paid by consumers last month.
The story continues
“Inflation has certainly become not only relevant but also a real problem for the wider market, as the Fed has also increased its prospects for the number of [interest rate] “Increases are needed,” said Sonali Pierre, managing director and portfolio manager at Pimco, told Yahoo Finance Live on Thursday. off balance, can remove some of that inflationary foam. Because it’s quite high and it’s starting to affect companies – from their ability to break through in terms of pricing, as well as consumers, whether it’s at the gas station, or as a result of increased food and the like. “
Other strategists have agreed that the Fed’s response to inflation – and how well the economy is doing as the Fed tightens financial conditions to tackle inflation – will be a key factor we need to look forward to for markets.
“We are currently in an environment where inflation is high. The labor market is very tight. The Fed wants to reduce inflation. They want to cool the overheating of the labor market, which means that their bias is to tighten financial conditions and try to slow down growth, “said Jason Draho, head of UBS’s asset allocation department, on Thursday. “It’s not great for any financial assets in this environment.”
“[Once] we get some real break in inflation, which makes people much more comfortable that it’s slowing down and slowing down [to] sustainable level that the Fed can be more comfortable and doesn’t need to rise more aggressively … I think that’s the key catalyst, “Draho said.” Unfortunately, it could take a few more months before the data to start making it clear that inflation is definitely at its peak and the Fed can reach its goal in two years. “
“So I think the market is definitely fragmented for now,” he added.
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7:54 a.m. ET: Tesla shares jumped at the start of trading after Musk said the Twitter deal was on hold
Shares of Tesla (TSLA) jumped more than 6% ahead of the opening bell on Friday morning after CEO Elon Musk said his $ 44 billion plan to buy Twitter (TWTR) has been suspended, pending more details on what part of the Twitter base includes bot accounts.
“The Twitter deal has been suspended pending details to support the calculation that spam / fake accounts actually account for less than 5% of users,” Musk said in a Twitter post early Friday. He linked a Reuters story that suggests that Twitter files show fake or spam accounts, accounting for less than 5% of the company’s daily active users who can earn a living.
Announcing his deal to buy Twitter last month, Musk suggested targeting bot accounts and verifying users to be one of his priorities for the company after the deal.
Shares of Twitter fell 11% at the beginning of trading to move around $ 40 per share.
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7:45 a.m. ET Friday: Equity futures jump after Powell confirms a rise in interest rates of 75 basis points, which is not currently being discussed
Here’s where the markets traded before the bell opened on Friday morning:
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S&P 500 futures (ES = F): +46 points (+ 1.17%) to 3973.25
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Dow futures (YM = F): +262.00 points (+ 0.83%) to 31,914.00
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Nasdaq futures (NQ = F): +206.75 points (+ 1.73%) to 12,154.00
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Crude oil (CL = F): $ +1.79 (+ 1.69%) to $ 107.92 per barrel
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Gold (GC = F): – $ 7.90 (-0.43%) to $ 1816.70 per ounce
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10-year treasury (^ TNX): +9.8 bps for 2.915% yield
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18:10 ET Thursday: Shares open lower
Here is where the markets traded on Thursday night:
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S&P 500 futures (ES = F): -10 points (-0.25%) to 3917.25
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Dow futures (YM = F): -73 points (-0.23%) to 31,579.00
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Nasdaq futures (NQ = F): -41 points (-0.34%) to 11,906.25
NEW YORK, NEW YORK – MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York. The Dow Jones Industrial Average fell in morning trading as investors continue to worry about inflation and other global issues. (Photo by Spencer Platt / Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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