U.S. stock futures rose early on Friday, but the majors were still set for sharp weekly losses as concerns resurfaced this week over a return to resilience in corporate profits in the face of inflation.
S&P 500 contracts rose more than 1% in early trade after Asian and European stocks China’s central bank unexpectedly cuts benchmark interest rate Some relief for borrowers in the country still grappling with the widespread COVID-19 outbreak.
Dow futures rose nearly 300 points and Nasdaq futures rose more than 1.5%. Treasuries steadied, with the benchmark 10-year yield hovering below 2.9%, and U.S. crude oil prices edged up above $112 a barrel.
However, Friday’s early gains in major U.S. stock indexes didn’t fully offset losses earlier in the week. The S&P 500 was down 5.4% for the week through Thursday’s close, its biggest drop since January. The index is also down 18.7% from its most recent close on Jan. 3, putting it within striking distance of a bear market, or at least 20% below its recent all-time high. The S&P 500 was also on track for its seventh straight weekly loss, its longest losing streak since 2001. The Dow and Nasdaq lost 5% and 6.2% for the week, respectively.
The latest bout of volatility comes after weaker-than-expected earnings results and forecasts from some major U.S. retailers, which appeared to confirm concerns that businesses are struggling to pass on rising costs to consumers. Ross Store (Rost) became the latest major retailer to cut its full-year guidance late Thursday, joining Walmart (WMT) and target (TGT) highlights the impact of inflation and supply chain disruptions on profitability. Ross’s shares were down more than 25% in premarket trading, with Target and Walmart’s weekly losses of 30% and 20%, respectively.
“Unfortunately, there are no safe havens. When we see news from consumer discretionary and staples…it shows that companies, big and small, are struggling,” said Eva Ados, chief operating officer of ER Shares, Tell Yahoo Finance Live. “It’s ironic that these industries, staples and consumer discretionary, are seen as safe havens in a bad economic market.”
The increasingly visible consequences of rising prices also make the case for the Fed to prioritize raising interest rates and tightening monetary policy to lower rates Inflation hits highest level since early 1980s, even at the expense of some growth in the wider economy. At the same time, however, other strategists pointed to some of the factors that contributed to the poor earnings of major companies this week – such as stock more than they sell – Even in the absence of a more aggressive policy response, it could eventually have a deflationary impact.
“We’re seeing retailers desperately trying to meet consumer demand by ordering a lot of items. It took a long time to get through the supply chain, but it’s finally hitting the shelves. Now they’re finding they have a little too much” CAPTRUST Investment Director Christian Ledoux told Yahoo Finance Live.
“So we can see a deflationary effect on some CPIs [Consumer Price Index] A number of factors will emerge in the coming months, he added. “If that does happen, the Fed may feel more comfortable, slow down, or even park at a lower rate point at some point in the future.”
7:15 a.m. ET: Stock futures open higher
This is where the market trades on Friday morning:
S&P 500 futures (ES=F): +40.75 points (+1.05%) to 3,938.50
Dow futures (YM=F): +267.00 points (+0.86%) to 31,469.00
Nasdaq Futures (NQ=F): +163.50 points (+1.38%) to 12,041.75
thick(CL=F): +$0.24 (+0.21%) to $112.45 per barrel
gold (GC=F): +$2.20 (+0.12%) to $1,843.40 per ounce
10-year Treasury note (^TNX): +0.2 basis points, yield 2.857%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.