Friday May 13th


Stock futures jump as S&P 500 looks to avoid bear market; Nasdaq futures rise 2%

U.S. stock index futures were higher early Friday morning as investors geared up for the S&P 500 to potentially slide into official bear market territory. Futures tied to the Dow Jones Industrial Average rose 330 points, or 1.06%. S&P 500 futures gained 1.44% while Nasdaq-100 futures were 2.03% higher. On Wednesday, the S&P 500 and Dow bounced off their intraday lows but still fell 0.1% and 0.3%, respectively. The S&P closed down more than 18% from its all-time high, and will be in an official bear market if that loss deepens to 20%. The Dow has declined for six straight trading sessions. The Nasdaq squeaked out a gain of less than 0.1% on Wednesday, but the tech-heavy index is already in a bear market, down more than 29% from its all-time high. All the major averages are on track to end the week in the negative. The Dow is down 3.55%, while the S&P 500 and Nasdaq have slipped 4.7% and 6.4%, respectively. The stock market has been slumping for months, starting with high-growth unprofitable tech stocks late last year and spreading to even companies with healthy cash flows stocks in recent weeks. On Thursday, Apple fell into a bear market of its own, becoming the last of the Big Tech names to succumb to the sell-off. The decline has wiped much of the rapid gains stocks enjoyed off their pandemic lows in March 2020. “Large deviations from long-term price trends have been used for bubble identification. We find that US equities have been in a bubble based on this metric, and are now exiting it,” Citi strategist Dirk Willer said in a note to clients on Thursday. One reason that stocks have struggled in recent months is high inflation, and the Federal Reserve’s attempts to contain prices by raising rates. Fed Chair Jerome Powell told NPR on Thursday that he couldn’t guarantee a “soft landing” that brought down inflation without causing a recession. Though stocks enjoyed a two-week rally after the Fed’s first rate hike in March, those gains were quickly erased by a brutal April and the selling has continued in May. There are some signs, such as investor sentiment surveys and some stabilization in the Treasury market this week, that the market could be near, but many investors and strategists say the market may need to take another sizable step down. “You’re getting this market that really is begging for a bottom, for a relief rally. But, at the end of the day, there really hasn’t been a capitulation day,” said Andrew Smith, chief investment strategist at Delos Capital Advisors. Twitter shares slumped nearly 13% in the premarket after Elon Musk announced the takeover deal is temporarily on hold as he awaits more details on the number of spam and fake accounts on the platform. Shares of AMC Entertainment and GameStop popped 9.5% and 7.7%, respectively, after the heavily shorted meme stocks jumped on Thursday. Affirm shares soared 36% on the back of a better-than-expected earnings report. Meanwhile, developments in cryptocurrencies have also unnerved Wall Street this week, with bitcoin falling well below $30,000 and stablecoins struggling to hold their peg. On the economic data front, Friday features a read on April import prices and an early look at May consumer confidence. Shares in Asia-Pacific rose on Friday, with markets seeing a rollercoaster week as investors assess the inflation and the global economic outlook. The Nikkei 225 in Japan closed 2.64% higher at 26,427.65. The Topix index climbed 1.91% to 1,864.20. In Hong Kong, the Hang Seng index jumped 2.68% to finish the trading day at 19,898.77. Mainland Chinese stocks closed higher, with the Shanghai Composite up 0.96% to 3,084.28 while the Shenzhen Component gained 0.585% to 11,159.79. South Korea’s Kospi advanced 2.12% on the day to 2,604.24. Oil prices extended gains on Friday but were headed for their first weekly loss in three weeks as worries about inflation and China’s COVID lockdowns slowing global growth offset concerns about dwindling fuel supplies from Russia. Brent crude futures were up 1.8%, or $1.95, at $109.40 per barrel, while U.S. West Texas Intermediate (WTI) crude futures advanced $1.94, or 1.8%, to $108.07. Both benchmark contracts were, however, on track to post declines for the week, with Brent set to drop nearly 3% and WTI nearly 2%. Gold fell on Friday and was headed for a fourth consecutive weekly decline pressured by overall strength in the dollar on prospects of aggressive interest rate hikes by the U.S. Federal Reserve. Spot gold fell 0.2% to $1,817.39 per ounce by 1039 GMT, after hitting $1,810.86, its lowest since Feb. 7. Bullion has lost over 3% so far this week. U.S. gold futures dropped 0.5% to $1,816.40 per ounce.