US stock futures rose slightly on Thursday night, as traders were watching whether the S&P 500 would stumble into bear market territory.
S&P 500 futures rose 0.1%, while Nasdaq 100 futures rose 0.3%. Futures related to the Dow Jones Industrial Average advanced 34 points, or 0.1%.
The moves came after another dovish day on Wall Street. Meanwhile, the Dow and Nasdaq fell 0.8% and 0.3%, respectively.
The S&P 500 fell 0.6% and is now 18.6% below a record closing high set in early January. The index is also down more than 19% from its intraday record high set earlier this year. At these levels, the benchmark index is close to entering a bear market – which many on Wall Street know as a 20% drop from a 52-week high.
Stocks were under pressure this week — the S&P 500 and Nasdaq both lost more than 3% and the Dow fell 2.9% — as the latest quarterly numbers from big retailers like Walmart and Target raise concerns about a weak consumer base and businesses’ ability to deal With high inflation for decades. Target and Walmart are down sharply after publishing their quarterly results this week.
“While several cross-currents are causing the current sell-off, the proximate cause of the recent acceleration in the stock decline revolves around concerns about the US consumer,” wrote Bill Stone, CIO of Glenview Trust. “For the first time in the post-Covid era, retailers are stuck with some excess stocks. And costs from inflation are also affecting their profits.”
“Finally, there is evidence that the low-end consumer is feeling the pain of higher prices,” Stone said.
Ross Stores was the latest retailer to fall after its earnings announcement. The stock is down more than 22% in the trading period after the close. CEO Barbara Rentler said that “after a stronger-than-planned start early in the period, sales underperformed the quarterly balance.”
Meanwhile, the Fed has indicated that it will continue to raise interest rates as it tries to cool the recent inflationary rally. Earlier in the week, President Jerome Powell said: “If that involves exceeding widely understood levels of neutrality, we will not hesitate to do so.”
This hawkish stance on monetary policy raised concern this week that Fed actions could push the economy into recession. On Thursday, Deutsche Bank said the S&P 500 could do so Decreases to 3000 if there is an imminent recession. That’s 23% less than Thursday’s close.
Stocks have struggled to find a foothold for nearly two months, with the Dow Jones on track for its eighth consecutive weekly decline. The S&P 500 and Nasdaq were headed for seven straight weeks of losses.
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