U.S. stock futures advanced in pre-market trading Thursday as markets attempted a comeback from steep selling in equities on the heels of disappointing outlooks from some major companies.
Futures tied to the S&P 500 climbed 0.5%, and contracts on the Dow Jones Industrial Average gained 160 points, or 0.5%. Nasdaq futures also edged higher, up 0.3% as the index clawed back from losses spurred by recent pressure in the technology sector.
The moves follow a brief reprieve for equities, which closed higher Wednesday but continue a downward trend despite a streak of day-to day gyrations. In the first 99 trading days of the year as of Wednesday’s close, the S&P 500 was down 17.3%, marking its fourth worst start to a year in history, per data from Compound Capital Advisors.
Shares of Macy’s (M) surged nearly 15% ahead of the open after the retail giant raised its profit outlook in an upside surprise to investors weighing a slew of downward forecast revisions from peers. Meanwhile, chip designer Nvidia Corp. (NVDA) joined the growing list of companies reporting weaker second-quarter forecasts and alluding to economic constraints ahead. The company’s stock fell in extended trading Wednesday despite reporting an earnings beat after Nvidia warned current-quarter revenue was likely to come in $500 million lower due to headwinds from Russia’s war in Ukraine and COVID lockdowns in China. A similar change in outlook from software peer Snowflake (SNOW) sent shares of the company down 14% in extended trading.
Recent trading sessions have seen sharp drawdowns in some big-name stocks after earnings reports that affirmed investor worries about the impact of inflation on corporate margins. Earlier this week social media giant Snap Inc. (SNAP) tumbled 43% in its biggest-one day drop on record, spurring a sell-off of other digital ad-dependent stocks that dragged the Nasdaq down to its lowest close since November 2020.
Last week, the downswing occurred in retail after Walmart (WMT) and Target (TGT) set off the recent trend of dramatic pullbacks in individual names following weaker earnings forecasts. According to data from FactSet, S&P 500 companies reporting results for the first quarter have seen the largest negative price reaction to positive earnings per share surprises since 2011.
“Whether it’s today or tomorrow, it does feel like we’re starting to digest what is a seemingly large amount of bad news,” Acorns Chief Investment Officer Seth Wunder told Yahoo Finance Live on Wednesday. “The key thing is to get data that eases some of the pressure off of the Federal Reserve.”
The pickup in disappointing guidance has kept Wall Street on edge for signs the central bank’s interest rate hiking plans will be effective in bringing prices back down to healthier levels. Minutes released Wednesday from the Fed’s May policy-setting meeting indicated the majority of officials were strongly committed to rate hikes of 50 basis points at each of the next two meetings in June and July. So far this year, policymakers bumped short-term borrowing costs by 50 basis points earlier this month and 25 basis points in April.
“Though market participants have feared this stance, it should be noted that the Fed has in excess of $100 billion is securities maturing on its balance sheet coming up, so the resulting asset purchases can help negate growth concerns this summer,” Comerica Wealth Management Chief Investment Officer John Lynch said in an emailed note. “It’s actually a perfect time for the Fed to raise aggressively and send a message to markets that they’re serious about inflation without sending growth into a tailspin.”
9:07 a.m. ET: US GDP contracted at slightly faster rate in the first quarter
U.S. gross domestic product fell at a 1.5% annualized rate in the first three months of 2022, according to a revised estimate out of Washington.
The nation’s GDP – the broadest measure of economic activity – was initially believed to logged a 1.4% contraction between January and March. The second reading came in higher than the revised contraction of 1.3% Bloomberg economists had anticipated.
In the fourth quarter, economy grew at a robust 6.9% pace. The slowdown comes amid lingering supply chain imbalances, inflation, and disruptions from war in Eastern Europe that weighed on growth.
8:58 a.m. ET: US jobless claims fall after climbing unexpectedly last week
Applications for unemployment insurance ticked back down in the latest weekly data, underscoring continued strength in the labor market despite higher inflation and worries of an economic slowdown.
The Labor Department’s latest weekly jobless claims report showed 210,000 claims were filed in the week ended May 21, coming in below the 215,000 economists surveyed by Bloomberg had expected. Last week, filings unexpectedly climbed to 218,000, the highest level since January.
Weekly claims continued to hover near a multi-decade low. However, several retailers, including Walmart Inc. (WMT), have recently slashed their outlooks and warned inflation was likely to weigh on profits, raising concerns among market participants that layoffs could be underway.
“Major retailers are reporting margin pressure and softer consumer demand as inflation erodes discretionary spending power and consumers redirect spending dollars from goods to services,” Comerica Chief Economist Bill Adams said in a recent note. “This will lead to slower job growth in the retail and e-commerce industries in the rest of 2022.”
“The stock market selloff could dampen business sentiment and make some businesses more cautious about hiring, especially businesses that are cash flow negative and rely on investors’ money to fund operations like many startups,” he added.
7:22 a.m. ET: Futures jump as the indexes claw back from sell-off
Here’s where stock futures were in pre-market trading Thursday:
S&P 500 futures (ES=F): +15.75 (+0.40%) to 3,992.50
Dow futures (YM=F): +134.00 (+0.42%) to 32,210.00
Nasdaq futures (NQ=F): +20.00 (+17.00%) to 11,962.25
Crude (CL=F): +$0.88 (+0.80%) to $111.21
Gold (GC=F): -$2.60 (-0.14%) to $1,843.70 per ounce
10-year Treasury (^TNX): -1.1 bps to yield 2.7490%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc