Friday April 22nd


S&P 500 futures are slightly lower as benchmark tries to avoid third losing week in a row

U.S. stock index futures were lower in early morning trading Friday as the benchmark index tried to avoid another losing week amid busy earnings and rising bond yields. Futures tied to the broad market index were 0.2% lower, while futures on the Dow Jones Industrial Average dipped 67 points, or 0.2%. Nasdaq 100 futures traded just above the flat line. The early morning action followed a dramatic reversal Thursday that saw major averages wiping earlier gains and closing lower. The Dow ended the day more than 300 points lower, while the S&P 500 dropped nearly 1.5%. The tech-heavy Nasdaq Composite bore the brunt of the sell-off on surging rates, sliding 2%. “Stagflation concerns resurface on the back of real-time signs of a tight labor market and waning business sentiment, coupled with another bounce in 10-year Treasury yields — and all peppered with a deluge of earnings releases,” Chris Hussey, a managing director at Goldman Sachs, said in a note. For this week, the Dow is up 1% and on pace to break a three-week losing streak. The S&P is up less than 0.1% on the week and attempting to break a two-week losing streak. The Nasdaq, however, is down 1.3% week to date, on track to post its third negative week in a row. Weighing on sentiment Thursday was Federal Reserve Chair Jerome Powell’s comment on the possibility of a larger-than-usual rate hike for next month. Powell said during an International Monetary Fund panel moderated by CNBC’s Sara Eisen that taming inflation is “absolutely essential” and a 50-basis-point hike is on the table for May. After reversing higher on Powell’s comments, the 10-year Treasury yield closed at 2.92% on Thursday. The 10-year yield was higher again on Friday, inching back up to 2.94%, near a three-year high. “Central bank hawkishness and bond yields back up are again moving markets,” Ross Mayfield, investment strategy analyst at Baird, told CNBC. “Nothing especially new but a fresh reminder of the monumental shift underway on the policy front. Powell did note there may be benefit to front-loading hikes and being aggressive early, this sets them up for the potential to cut later on if the economy stumbles.” Meanwhile, the first-quarter earnings season continues to roll on. Snap shares fell 3% in premarket trading as the social media platform reported first-quarter revenue short of expectations even after showing strong growth in daily users. Gap shares plunged 13% in premarket trading after the company announced the CEO of its Old Navy division, Nancy Green, is leaving the business this week. Gap also slashed its outlook for net sales growth in fiscal 2022. American Express shares were down slightly premarket despite the company reporting quarterly earnings and revenue beats. Verizon shares fell more than 2% after the company reported a loss of 36,000 monthly phone subscribers in the first quarter. Shares in Asia-Pacific were mostly lower on Friday as investors watched for market reaction to comments from the Chinese central bank governor Yi Gang as well as overnight remarks from U.S. Federal Reserve Chairman Jerome Powell. Mainland Chinese stocks closed mixed, with the Shanghai composite rising 0.23% to 3,086.92 while the Shenzhen component dipped 0.294% to 11,051.70. Hong Kong’s Hang Seng index pared some losses after falling more than 2% earlier. It closed 0.21% lower at 20,638.52 as shares of Chinese tech giants Tencent and Alibaba dropped 2.13% and 1.42%, respectively. The Nikkei 225 in Japan led losses among the region’s major markets, declining 1.63% to close at 27,105.26 as shares of conglomerate SoftBank Group dropped 3.01%. The Topix index shed 1.19% to 1,905.15. South Korea’s Kospi ended the trading day 0.86% lower at 2,704.71. Oil slipped on Friday, burdened by the prospect of weaker global growth, higher interest rates and COVID-19 lockdowns in China hurting demand even as the European Union considers a ban on Russian oil that would further tighten supply. The International Monetary Fund this week cut its global economic growth forecast while the U.S. Federal Reserve Chair on Thursday said that a half-point increase to interest rates “will be on the table” at the next Fed policy meeting in May. Brent crude was down $1.48, or 1.4%, at $106.85 a barrel by 7:50 a.m. ET. U.S. West Texas Intermediate (WTI) crude futures declined $1.51, or 1.5%, to $102.27 a barrel. Gold prices fell on Friday as the prospect of aggressive interest rate hikes boosted U.S. Treasury yields and the dollar, denting zero-yielding bullion’s appeal and setting prices on track for their first weekly decline in three. Spot gold was down 0.9% to $1,933.59 per ounce at 7:20 a.m. ET. U.S. gold futures declined 0.6% to $1,936.3.