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Stocks were trying to find their footing Wednesday amid renewed concerns about economic growth and whether central banks are raising interest rates too quickly.
Dow Jones Industrial Average
futures have risen 26 points, or 0.1%, while
S&P 500
futures were little changed, and
Nasdaq Composite
futures had dipped 0.1%. The S&P 500 and Nasdaq retreated 2% and 3% on Tuesday, respectively.
Overseas, the pan-European
Stoxx 600
lost 1.3% and Hong Kong’s
Hang Seng Index
tumbled 1.9% as Asian bourses followed Wall Street’s downbeat performance in the last session.
Though Tuesday started off fine, stocks ended up suffering their worst day in two weeks as investors soured on downbeat signals from the consumer confidence index, on that also showed continued concerns about inflation. “
[Not] only did the headline badly miss expectations, falling to a 16-month low, but consumer inflation expectations for the year ahead within the report jumped from an upwardly revised 7.5% to 8.0%, which notably contradicts the pullback in the final University of Michigan data set from last Friday that ignited the latestrally in stocks,” writes The Sevens Report’s Tom Essaye.
Now, the markets will be listening for clues about what the Fed plans to do as central bankers meet at a summit in Portugal. Fed chair Jerome Powell will deliver remarks alongside counterparts from the Bank of England and European Central Banks.
“As ever, markets will be dissecting [Powell’s] every word, looking for hints in this case, that the Fed is wavering on its hawkish bias as recessionary fears rise,” said Jeffrey Halley, an analyst at broker Oanda. “They are likely to be disappointed, but it should be good for some intraday [volatility].”
Ahead of Powell’s remarks, the president of the Cleveland Fed, Loretta J. Mester, told CNBC that the central bank was “just at the beginning” of hiking rates to control inflation. Acknowledging the risk of recession, Mester said she supported another mega-sized 75 basis-point rate hike in July if economic conditions remain unchanged. The typical interest-rate increase is 25 basis points.
Investors will also be eyeing a revision to first-quarter U.S. gross domestic product data Wednesday amid worries over the economic picture. The yield on the 10-year U.S. Treasury note was hovering around 3.17%, down from above 3.2% earlier this week.
Tuesday’s decline called into question whether a bottom had really been formed last week following the stock market’s big rally—and bears are feeling rejuvenated.
“We do not believe the stock market has bottomed yet and we see further downside ahead,” said George Ball, the chair of investment group Sanders Morris Harris. “We see the S&P 500 bottoming at around 3,100, as the Federal Reserve’s aggressive, but necessary, inflation-fighting measures are likely to depress corporate earnings and push stocks lower.”
But with the bulls trying to stand their ground Wednesday morning, it’s anyone’s game right now.
Here are stocks on the move Wednesday:
NIO
(ticker:
NIO
) fell 7.5% in the U.S. premarket after short seller Grizzly Research claimed that the Chinese electric-vehicle maker exaggerated revenue and profit margins;
NIO
denied the report.
2U
(TWOU) jumped 14% in the premarket after a report that the educational technology company has received a buyout offer from India’s Byju for more than $1 billion.
AeroVironment
(AVAV) dropped 11% in the premarket after the defense supplier’s fiscal 2023 forecast fell short of analysts’ estimates.
Just Eat Takeaway.com
(JET.UK) tumbled 20% in London trading after analysts at Berenberg initiated coverage of Europe’s largest online food delivery group with a Sell rating, citing risks over the company’s ability to dispose of its U.S. Grubhub business.
Bath & Body Works
(BBWI) has dropped 5% after getting cut to Neutral from Overweight at JPMorgan.
Bed Bath & Beyond
has slumped 13% after announcing that its CEO had “left his role” following a larger-than-expected quarterly loss.
Carnival
(CCL) has fallen 7.8% after Morgan Stanley cut its price target to $7, from $13.
McCormick
(MKC) has fallen 7.4% after missing earnings forecasts and offering disappointing guidance.
Pinterest
(PINS) has gained 2.7% after replacing its CEO.
Tesla
(TSLA) has fallen 1.3% amid reports of layoffs at its autopilot division.
Upstart
(UPST) has fallen 9.6% after getting cut to Underweight from Equal Weight at Morgan Stanley.
Write to Jack Denton at [email protected]
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