U.S. stock futures rose on Thursday night as traders watched to see if the S&P 500 would fall into bear market territory.
S&P 500 futures traded 0.62% higher and Nasdaq 100 futures rose 1%. Futures pegged to the Dow Jones Industrial Average rose 188 points, or 0.6%.
These steps appeared after another sad day on Wall Street. At the same time, the Dow and Nasdaq fell 0.8% and 0.3% respectively.
The S&P 500 fell 0.6% and is now 18.6% below the record closing high set in early January. The index is also more than 19% below the all-day high reached earlier this year. At these levels, the benchmark is a few steps away from entering the bear market – many on Wall Street define it as falling by 20% from a 52-week high.
Shares were under pressure this week, with the S&P 500 and Nasdaq losing more than 3% and the Dow down 2.9% as recent quarterly figures from major retailers such as Walmart and Target raise concerns about weakening consumer base and ability companies are struggling with high decades of inflation. Target and Walmart fell sharply after publishing their quarterly results this week.
“While many cross-currents are causing the current sell-off, the approximate reason for the recent acceleration in stock declines revolves around consumer fears in the United States,” wrote Bill Stone, CIO Glenview Trust. “For the first time since Covid, retailers have been stuck with some surplus stocks. Inflation costs are also affecting their profits.”
“Finally, there is evidence that a low-priced consumer is under pressure from rising prices,” Stone said.
Ross Stores was the last retailer to fall after earning revenue. Shares fell more than 22% in trading during non-business hours. CEO Barbara Rentler said that “after the start was stronger than planned, at the beginning of the period sales did not increase compared to the rest of the quarter.”
Meanwhile, the Federal Reserve has given a signal that it will continue to raise interest rates, trying to curb the recent surge in inflation. Earlier this week, Chairman Jerome Powell said: “If it involves moving beyond widely understood levels of neutrality, we will not hesitate to do so.”
Such a tough stance on monetary policy has raised concerns this week that Fed action could push the economy into recession. On Thursday, Deutsche Bank said the S&P 500 could fall to 3,000 if a recession is imminent. That’s 23% below Thursday’s close.
The stock is struggling to find support for about two months, and the Dow is going to fall eight consecutive weekly falls. The S&P 500 and Nasdaq headed for a seven-week losing streak.
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