Stock futures fell Thursday after the Federal Reserve delivered another interest rate hike and signaled that no pivot or rate cut is coming anytime soon.
Futures tied to the Dow Jones Industrial Average traded 164 points lower, or 0.51%. S&P 500 futures and Nasdaq 100 futures dipped 0.7% and 0.9%, respectively.
A spike in yields put pressure on futures. The benchmark 10-year Treasury yield popped 14 basis points to 4.199%. The 2-year rate traded 16 basis points higher at 4.73%.
Traders had anticipated the central bank’s 0.75 percentage point rate increase and initially read the Fed’s statement as dovish, sending stocks higher on Wednesday after the decision was delivered. Those gains then reversed when Fed Chair Jerome Powell said it was “premature” to talk about a rate hike pause and that the terminal rate would likely be higher than previously stated.
“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.
The Dow Jones Industrial Average ended Wednesday’s trading session 505 points lower, or 1.6%. The S&P 500 dropped 2.5%, and the Nasdaq Composite was off by 3.4%.
Markets will likely continue to seesaw until it is clear inflation has cooled off and that the Fed has stopped marching rates higher, with traders split over where interest rates are headed. Any data that shows the U.S. economy isn’t slowing as the central bank tightens policy will likely weigh on stocks.
“In our view, the risk-reward for markets over the next three to six months is unfavorable, and today’s Fed statement supports that view,” wrote Mark Haefele, UBS’ chief investment officer in a note to clients Wednesday.
Meanwhile, the Bank of England implemented a 75 basis point hike on Thursday, its largest increase in 33 years, as it battles high inflation.
Investor attention Thursday also turned to October nonfarm payrolls, set to be released Friday. A good jobs number and a low unemployment rate, while good for the economy, could signal more work ahead for the Fed.
“You get a good jobs number, in other words a good unemployment rate that doesn’t go higher, then the market is in a lot of trouble,” said Guy Adami, director of advisor advocacy at Private Advisor Group, said on CNBC’s “Fast Money.”
Corporate earnings season continued, with Qualcomm, Roku and Fortinet all falling sharply in the premarket on disappointing quarterly results and forward guidance. Peloton’s stock tumbled after reporting a wider-than-expected loss, while Moderna sank on a lowered Covid vaccine sales outlook.
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Restaurant Brands (QSR) – The parent of Burger King, Tim Hortons and Popeyes saw its stock rally 4% in premarket trading after the company reported better-than-expected quarterly results. Same-restaurant sales jumped 14%, well above the 8.3% rise predicted by analysts who were surveyed by FactSet.
STOCK SYMBOL: QSR
Under Armour (UAA) – Under Armour jumped 4.2% in premarket action after the apparel maker reported better-than-expected earnings for its latest quarter, along with revenue that was roughly in line with Street forecasts. The rise comes despite Under Armour cutting its full-year forecast for the impact from a stronger U.S. dollar and higher costs.
STOCK SYMBOL: UAA
Peloton (PTON) – The fitness equipment maker’s stock tumbled 18.1% in premarket trading after it reported a larger-than-expected quarterly loss and revenue that fell short of analyst predictions. Peloton also issued a weaker-than-expected holiday quarter forecast.
STOCK SYMBOL: PTON
Moderna (MRNA) – The drug maker’s stock slumped 11.9% in premarket action after Moderna reported a quarterly profit of $2.53 per share, well below the consensus estimate of $3.29. The company also cut its annual forecast for Covid-19 vaccine sales.
STOCK SYMBOL: MRNA
Qualcomm (QCOM) – Qualcomm slumped 8.3% in the premarket after it gave a worse-than-expected revenue outlook as smartphone shipments slid. The chip maker also reported quarterly revenue and profit that were in line with Wall Street forecasts.
STOCK SYMBOL: QCOM
Roku (ROKU) – Roku shares tumbled 18.5% in off-hours trading after the maker of video streaming devices said it expected advertising revenue and device sales to fall in the current quarter. The forecast is weighing on shares despite Roku reporting better-than-expected revenue and a larger-than-expected number of active accounts.
STOCK SYMBOL: ROKU
Robinhood Markets (HOOD) – Robinhood rose 2.9% in premarket trading after the online brokerage reported a smaller-than-expected quarterly loss and revenue that topped analyst forecasts. Robinhood also lowered its operating expense forecast for the full year.
STOCK SYMBOL: HOOD
Booking Holdings (BKNG) – Booking Holdings rose by 5.1% in the premarket after the travel services company posted top and bottom line beats for its latest quarter. It also posted an upbeat outlook as travel demand remains strong.
STOCK SYMBOL: BKNG
Crown Holdings (CCK) – Investor Carl Icahn now holds a more than 8% stake in the beverage can maker, according to the Wall Street Journal, and is said to believe the company should buy back more stock and put non-core units up for sale. Crown Holdings rallied 5.5% in the premarket.
STOCK SYMBOL: CCK
eBay (EBAY) – eBay surged 6.7% in premarket trading after the e-commerce company reported better-than-expected results for its latest quarter, boosted by sales of refurbished goods and luxury offerings.
STOCK SYMBOL: EBAY
Etsy (ETSY) – Etsy stock spiked 9.3% in the premarket after the online crafts marketplace reported a better-than-expected quarter, saying its business remained strong in a volatile economic environment.
STOCK SYMBOL: ETSY
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What’s on everyone’s radar for today’s trading day ahead here at r/stocks?
I hope you all have an excellent trading day ahead today on this Thursday, November 3rd, 2022! 🙂