US stock futures fell, prompting major indexes to prolong losses after one of the worst Wall Street sales since the pandemic began.
Dow Jones Industrial Average futures fell 0.3% a day after the blue-chip index fell more than 1,000 points, its worst day in 2020. S&P 500 futures fell 0.5% while Nasdaq-100 technology futures fell 0.6%. %.
Shares have been shattered in recent days as investors try to assess the impact of the Federal Reserve’s plan to raise interest rates on the economy. Investors are caught between competing hopes: the rise in interest rates will be significant enough to curb rising inflation, but not so much as to hamper economic growth.
“The market is trying to balance whether central banks are more worried about inflation or slowing growth, and the market has clearly decided that they are more worried about inflation,” said Altaf Qassam, head of investment strategy for Europe, the Middle East and Africa. State Street Global Advisors. “If the Fed fights inflation at any cost, it will certainly affect stocks.
U.S. stocks rose on Wednesday after the Federal Reserve raised interest rates by half a percentage point, backed by relief that it is not actively considering even bigger increases in the future, but that relief faded on Thursday as investors overestimated stock prospects.
Federal Reserve Chairman Jerome Powell said Wednesday that the central bank has approved a half-percentage point increase in interest rates in a bid to cut inflation, which has been peaking for four decades. Photo: Win McNamee / Getty Images
Estimates of US markets have “moved from rich to very rich” over the past 10 years as stock prices have risen more than profits, said Frank Benzimra, head of Asia’s shareholding strategy at Société Générale. But as interest rates rise, the value investors invest in companies’ future cash flows decreases, he said.
In the bond markets, the yield on the benchmark 10-year US government securities rose to 3.074% from 3.066% on Thursday, marking its highest level since November 2018. Bond yields rose as prices fell.
One of the reasons for the fluctuating market fluctuations: Investors have no obvious refuge, as bonds and gold have been under pressure from rising interest rates.
“To deal with this instability, you need a buffer, but the fixed income is not the buffer it was before,” Mr Qassam said.
Brent crude oil, global oil, rose 1.6 percent to $ 112.70 a barrel, extending recent gains from expectations that the European Union is ready to ban Russian oil imports in response to its invasion of Ukraine. Gold prices rose by 0.2%
Bitcoin fell 0.8 percent to $ 36,152 after falling more than 8 percent on Thursday as a market sell-off forced investors to abandon risky bets such as cryptocurrencies.
Investors expected data on the state of the labor market, a strong point for the US economy with an unemployment rate close to 50 years. This has also led to higher wages, adding to the build-up of inflationary pressures. The April job report, scheduled for 8:30 a.m. ET, is expected to show another strong month to increase jobs.
Japanese stocks opposed the broader downtrend when the Tokyo market reopened after three days of holidays.
Photo: kazuhiro nogi / Agence France-Presse / Getty Images
Abroad, benchmarks in both Asia and Europe retreated, following losses in the United States, with the Hang Seng technology index declining 3.8 percent. In mainland China, the Shanghai Composite Index fell 2.2%. In Europe, the pan-continental Stoxx Europe 600 fell 1.2%.
Japanese stocks countered against a broader downtrend as the Tokyo market reopened after three days of holidays, with the Nikkei 225 up 0.7 percent.
Write to Rebecca Feng at rebecca.feng@wsj.com and to Will Horner at William.Horner@wsj.com
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