Stock futures stumble after in-line inflation print

U.S. stocks opened lower on Thursday as investors digested the latest batch of economic data and braced for more Fedspeak and the start of earnings season from corporate tech giants.

The S&P 500 (^GSPC), the Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) were all down about 0.5% in early trade.

Bond prices rose. The yield on the 10-year US Treasury note fell to 3.368% from 3.374% on Wednesday. The dollar index fell on Thursday morning.

Stocks fell sharply on Wednesday after new government data showed a slowdown in consumer spending activity, while a reading on wholesale price inflation showed signs of easing price pressures in the economy. The S&P 500 had its worst day since mid-December on Wednesday, falling short of its 200-day moving average, according to the US Market Intelligence team at JP Morgan.

Wall Street will look to another round of data, as well as statements Thursday from Vice Chairman Lael Brainard, Bank of New York President John Williams and Bank of Boston President Susan Collins. Before the Fed’s next monetary policy meeting, which will begin on January 31, all three Fed speakers will participate in various events.

Other Fed officials called for more rate hikes on Wednesday. St. Louis Fed President James Bullard said policymakers should raise interest rates above 5% “as quickly as we can” before ending the current hiking cycle.

On the economic data front, U.S. new home construction continued to decline in December, the fourth consecutive monthly decline, capping a disappointing year for the industry.

Housing starts fell 1.4% to 1,382 last month million annual rate, according to government data released Thursday. Single-family home construction rose to an annual rate of 909,000. Economists polled by Bloomberg called for a 1.36 million increase in total housing starts in December.

Building applications, a proxy for future construction, fell 1.6% to an annualized 1.33 million units. Permits for the construction of single-family homes decreased by 6.5%.

Initial jobless claims fell to 190,000 from 205,000 in the previous week. Claims were expected to rise to 214,000, according to Bloomberg estimates.

Meanwhile, the Philadelphia Fed Manufacturing Index improved modestly in January to -8.9 from -13.8 in December. This indicator was better than predicted -10.3.

Investors are starting to head into a tough fourth-quarter earnings season, with analysts cutting their forecasts for revenue growth. According to data from FactSet Research – the consensus for an earnings decline is 3.9%, which, if realized, would mark the first annual earnings decline reported by the index since 2020.

DataTrek’s Nicholas Colas notes that the strength of corporate earnings remains a question mark. Fourth-quarter earnings should provide some insight, but management’s comments on this year’s fundamentals will be more important. The problem, according to Kolas, is that no CEO has the motivation to be optimistic right now.

Netflix ( NFLX ) reports earnings Thursday after the market close, kicking off a two-week period in which most of the market’s biggest tech companies report quarterly results.

The streaming giant’s results will be closely watched, with this quarterly update taking a closer look at the company’s subscriber growth over the last period and any color in the ad-supported service tier. In addition, the company may provide potential updates regarding its planned actions regarding password sharing.

Netflix’s logo is pictured at the 2022 Paris Motor Show on October 17, 2022 in Paris, France. REUTERS/Stephane Mahe

In market-specific moves, shares of Alcoa ( AA ) fell on Thursday after the US-based aluminum producer reported lower prices for its aluminum products at the end of 2022.

Shares of Procter & Gamble ( PG ) fell 1% on Thursday morning after the company raised its full-year sales forecast amid price increases to offset the impact of transportation, commodity, labor costs and a strong U.S. dollar on overseas earnings. .

Shares of Amazon ( AMZN ) fell 2% after news that the firm was ending its AmazonSmile charity donation program. The decision to end the decade-old program is the latest cost-cutting decision at the company.

In commodity markets, West Texas Intermediate (WTI) rose nearly 1% to $80 per barrel. Meanwhile, according to AAA data, gas prices have increased by 5.33% since the end of 2022.

Dani Romero is a reporter for Yahoo Finance. Follow him on Twitter @daniromerotv

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