The mood on Wall Street continues to be somber on Thursday, as risk aversion continues to rule high. Some positive earnings could serve to cushion any potential slide even as traders look ahead to the jobless claims report and Fed speeches for more clues toward the economic and rate outlook.
Cues From Wednesday’s Trading:
On Wednesday, the major averages ended mostly lower as a sharp rise in bond yields, exacerbated by the price component of the Institute for Supply Management’s purchasing managers’ survey, and mixed earnings stifled any recovery attempt. The major indices opened lower but recovered in early trading. The S&P 500 Index and the Nasdaq Composite pulled back immediately after and languished below the unchanged line for the rest of the session.
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The 30-stock Dow Industrials showed a lack of direction and flitted in and out of the unchanged line a few times before closing marginally higher. While the Dow bounced off a four-month low, the tech-heavy Nasdaq Composite and the S&P 500 Index ended at their lowest levels since late January.
Most sectors, with the exception of energy, material and industrial stocks, came under selling pressure. Consumer discretionary, utility and real estate stocks were among the worst hit.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | -0.66% | 11,379.48 | |
| S&P 500 Index | -0.47% | 3,951.39 | |
| Dow Industrials | +0.02% | 32,661.84 |
Analyst Color:
A slowing manufacturing sector, as underlined by the ISM survey, should ease demand for inputs such as semiconductors, said LPL chief economist Jeffrey Roach. “Higher prices paid within the manufacturing sector is ominous but markets shouldn’t panic yet, “ he added.
”The biggest risk to markets is an economy that stagnates yet continues to struggle with nagging inflation pressures.”
The economist expects the Fed to keep hiking in the coming meeting as the broader economy recalibrates.
Futures Today
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | -0.73% | |
| S&P 500 Futures | -0.52% | |
| Dow Futures | +0.08% | |
| R2K Futures | -0.75% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY slipped 0.47%, to $392.88, and the Invesco QQQ Trust QQQ declined 0.72%, to $289.10, according to Benzinga Pro data.
Upcoming Economic Data:
The Labor Department is scheduled to release its weekly jobless claims report at 8:30 a.m. EST. Economists expect the number of individuals claiming for unemployment benefits to come in at 195,000 in the week ended Feb.25 compared to 192,000 in the previous reporting week.
The Treasury Department will auction 4-week and 8-week bills at 11:30 a.m. EST and 6-month bills at 1:22 p.m. EST.
Fed Governor Christopher Waller is due to speak at 4 p.m. EST and Minneapolis Fed President Neel Kashkari will speak at 6 p.m. EST.
Stocks In Focus:
- Salesforce Inc. CRM soared over 15% in premarket trading after the company reported better-than-expected quarterly results.
- Okta Inc. OKTA stock rallied over 16%, while Snowflake Inc. SNOW fell about 7%, in reaction to their respective quarterly results.
- Tesla Inc. TSLA pulled back over 6% following its Investor Day event.
- Wolfspeed Inc. WOLF shares slumped over 10% after Tesla announced at its Investor Day that it would not use rare earth metals for its next-gen platforms.
Anheuseur-Busch Inbev SA BUD, Big Lots Inc. BIG, Bilibilli Inc. BILI, Hormel Foods Corp. HRL, Best Buy Company Inc. BBY and Macy’s Inc. M are among the noteworthy companies due to release their quarterly results ahead of the market open.
- Major companies reporting after the close are Broadcom Inc. AVGO, Costco Wholesale Corp. COST, Dell Technologies Inc. DELL, Hewlett Packard Enterprise Company HPE, Marvell Technology Inc. MRVL, Nordstrom Inc. JWN, Vmware Inc. VMW and Zcaler Inc. ZS.
Top Analysts’ Call
- Novavax Inc. NVAX: B. Riley Securities downgrades from Buy to Neutral and reduces price target from $29 to $10.
- Nio Inc. NIO: JPMorgan downgrades to Overweight to Neutral and cuts price target from $12 to $10.
- Moderna Inc. MRNA: RBC Capital Markets initiates at Outperform with a $200 price target.
- Salesforce: Piper Sandler maintains Overweight rating and raises price target from $171 to $230
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures were rising for a third straight session on Thursday. A barrel of crude oil traded up 0.72% at $78.25. The yield on the benchmark 10-year U.S. Treasury, which topped 4% on Wednesday before easing settled, was on its way back higher. The yield rose 0.034% to 4.03%.
Asian stocks closed mixed yet again on Thursday as investors in the region took cognizance of the risks facing the U.S. economy. The Japanese, Hong Kong, Chinese and Indian markets settled lower, while the rest of the major markets in the region posted uneasy gains.
The major European markets are moderately lower in late-morning trading, as the flash estimate released by Eurostat showed that core inflation in the eurozone is expected at a record 5.6% in February, stoking fears of more rate hikes by the European Central Bank.
Read Next: Jim Cramer Says Inflation Needs To Cool In These Areas Before Expecting Relief From Rate Hikes
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