Thursday night saw stock futures hovering near the flatline as investors digested the latest corporate earnings reports and grappled with implications from the latest inflation data.
Futures tied to the Dow Jones Industrial Average showed a marginal loss of 10 points, trading close to the flatline. Similarly, S&P 500 futures and Nasdaq 100 futures exhibited minimal movement.
In after-hours trading, software provider Adobe witnessed a significant decline of nearly 11% following weak sales guidance. Beauty retailer Ulta also experienced a notable slide of over 6% after its full-year earnings forecast fell short of analyst expectations.
These developments followed a negative day on Wall Street, with the Dow slipping over 100 points, or approximately 0.4%, ending a three-day winning streak. Similarly, the S&P 500 and Nasdaq each recorded losses of around 0.3%.
The retreat on Thursday came in the wake of February’s producer price index, which indicated a more significant increase in wholesaler inflation than economists had anticipated. Bond yields saw an uptick during the session, with the benchmark 10-year Treasury yield reaching 4.29%. This rise prompted speculation among investors regarding whether the recent economic data would deter the Federal Reserve from implementing monetary policy adjustments.
Although fed funds futures suggest a 99% probability of the central bank maintaining interest rates at its upcoming policy meeting next week, recent economic indicators have raised doubts about whether the Fed perceives inflation as sufficiently subdued to warrant future rate cuts, noted Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Luschini highlighted the non-linear trajectory toward the Fed’s 2% target rate, suggesting that recent developments may dampen market participants’ enthusiasm.
However, Luschini also cautioned against overreaction to Thursday’s declines, noting that such pullbacks are not uncommon following periods of market gains. Despite the downward movement, both the Dow and S&P 500 remain on track to end the week with modest gains of around 0.5%, while the Nasdaq is poised to register a 0.3% increase. Moreover, all three indices continue to show positive performance for the year.
Investor attention will turn to Friday morning’s release of economic data, including reports on consumer sentiment, import prices, and industrial production, for further insights into the economic landscape.
