Global Courant 2023-05-05 12:47:28
Traders work on the floor of the New York Stock Exchange in New York City on April 21, 2023.
Spencer Plat | Getty Images News | Getty Images
Equity futures were trading slightly higher early Friday morning.
S&P 500 futures rose 0.38%, while Nasdaq 100 futures rose 0.37%. Futures linked to the Dow Jones Industrial Average gained 101 points, or 0.3%.
Investors were presented with a new list of corporate earnings, including Apple, after Thursday’s close. The tech giant posted top and bottom line beats for its fiscal second quarter, propelled by iPhone sales. Apple shares gained more than 2% in extended trading.
During the regular session on Thursday, the three main averages closed lower for the fourth consecutive day. The S&P 500 lost 0.72%, while the Nasdaq composite decreased by 0.49%. The Dow lost 286.50 points, or 0.86%. The 30-stock index also dipped into the red for 2023, down 0.06%. Renewed fears of contagion risk from the embattled regional banking sector drove the sell-off and depressed investor sentiment.
The averages also track for a week of losses — the worst performance for all three since March 10. The S&P 500 is down 2.6%, while the Nasdaq is down 2.1%. The Dow Jones is down 2.8%.
Investors are nervous about the Federal Reserve’s forward path following Wednesday’s 25 basis point rate hike by policymakers.
“(With the) cost of capital rising at such a rapid pace after being at zero or 1% for so long, and then continuing at these higher levels, that just creates a whole bunch of problems and we don’t know exactly where the risk will pop out,” JPMorgan Chase’s U.S. equity strategist Dubravko Lakos said on CNBC’s “Closing Bell.” “The risk of ‘unknown unknowns’ just gets bigger the longer we stay at the higher interest rate levels.”
He said that because it is not yet clear what Fed Chairman Jerome Powell’s threshold is for raising rates — despite the risk of a recession if the central bank tightens too much — investors are unlikely to see comfort.
“I think once you get to the point where you start to see signals that the Fed is definitely looking for cuts and easing, and the regional banking side, the business model starts to make more sense, I think you start to get some relief, but we’re not there,” Lakos said.
The April salary data, which includes the most recent unemployment rate and wage growth information, will provide the Fed with another data point when making decisions about the next step. The jobs report is out Friday at 8:30 a.m. ET. Economists predict that 180,000 jobs would be added, according to Dow Jones.
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