Stock Futures Inch Lower After Wednesday's Big Market Rally
Stock Futures Inch Lower After Wednesday's Big Market Rally https://digitalalaskanews.com/stock-futures-inch-lower-after-wednesdays-big-market-rally/
Stock futures inched lower on Thursday morning after the Dow Jones Industrial Average staged a comeback off its lowest level for the year.
Futures tied to the Dow Jones slipped 22 points, or 0.07%, while S&P 500 and Nasdaq 100 futures shed 0.08% and 0.2%, respectively.
The overnight moves came following a broad rally for stocks as the Bank of England said it would purchase bonds in an effort to help steady its financial markets and the cratering British pound. Sterling has stooped to record lows against the U.S. dollar in recent days.
It marked a stark shift from the aggressive tightening campaign many global central banks have undertaken to cope with surging inflation.
During regular trading on Wednesday, the Dow gained 548.75 points, or 1.88%, to 29,683.74, while the S&P 500 rose 1.97% to 3,719.04, after hitting a new bear market low on Tuesday. Both indexes snapped a six-day losing streak. The Nasdaq Composite was up 2.05%, closing at 11,051.64.
As stocks rose and the BOE shared its bond-buying plan, the yield on the benchmark 10-year Treasury note dropped the most since 2020 after briefly topping 4%.
“If the market had a negative sign in front of it today, and not a positive sign, it wouldn’t surprise me,” said Liz Ann Sonders, Charles Schwab’s chief investment strategist. “The market’s going to do what it does on any single given day. You can attempt to sort of point to what might have sat behind it, but that’s just a parlor game. A lot of it is the market got really oversold and buyers stepped in.”
Wednesday’s rally put the major averages on pace to eke out small gains for the week, but they are still on track to cap off their worst month since June. The Nasdaq Composite is leading the monthly losses, down about 6.5%, while the Dow and S&P are on pace to close 5.8% and 5.9% lower, respectively.
On a quarterly basis, the Nasdaq is on track to break a two-quarter losing streak, while the Dow is headed for its third consecutive quarterly loss for the first time since the third quarter of 2015. The S&P is on pace for its third negative quarter in a row for the first time since its six-quarter negative streak that ended the first quarter of 2009.
Earnings continue Thursday with results from Nike, Bed Bath & Beyond and Micron Technology. Initial jobless claims and more speeches from Federal Reserve leaders are also due.
Stocks may continue this ‘oversold bounce’ over the next few days, Wells Fargo’s Harvey says
Wells Fargo’s Chris Harvey expects stocks to continue their upward move.
“The spike in short interest, retail selling skew, and BOE’s action all suggest stocks will continue their oversold bounce for the next few days,” he said in a note to clients Wednesday.
Stocks hit fresh lows earlier in the week, with the S&P 500 notching a new bear market. The sell-off was triggered by the Fed’s latest rate decision last week, which some investors believe steered the market into oversold conditions.
As the cost of capital rises and prices hover near record highs, the consensus is increasingly coming to believe that a Fed-induced recession is unavoidable, Harvey said.
“We look at a recession like a car crash,” he wrote. “You never know how bad it will be, but there is almost no ‘better-than-expected’ outcome — so policymakers need to be careful what they wish for.”
— Samantha Subin
Major averages on pace for a month of losses
Just two trading days are left in September and all the major averages are on pace to cap off the month with losses.
While Wednesday’s market comeback put the major averages on track for modest weekly gains, the Nasdaq Composite, Dow Industrial Averages and S&P 500 are slated to lose nearly 6% each in September.
The end of the third quarter also comes Friday, with the Dow on pace to cap its third negative quarter in a row for the first time since the third quarter of 2015. The S&P is slated to post its third consecutive negative quarter since its six-quarter losing streak that ended the first quarter of 2009. Meanwhile, the Nasdaq is on track to snap a streak of two consecutive down quarters.
Here’s where the major averages stand heading into Thursday:
Dow Jones Industrial Average:
Up 0.32% for the week
On track to lose 5.8% this month
Down 3.55% this quarter
Down 18.31% this year
S&P 500
Up 0.7% this week
Set for a 5.97% September loss
Down 1.75% for the quarter
Down 21.97% this year
Nasdaq Composite:
Up 1.69% this week
On pace for a 6.47% September loss
Up 0.2% for the quarter
Down 29.36% this year
— Samantha Subin, Chris Hayes
Futures open flat
Futures opened flat following a broad market rally during Wednesday’s regular trading session. Futures tied to the Dow Jones rose 10 points, or 0.04%, while S&P 500 and Nasdaq 100 futures were flat.
— Samantha Subin
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