U.S. stock futures stumbled in morning trade on Thursday as optimism around easing inflation waned and investors analyzed variegated corporate profits.
Futures linked to the S&P 500 (^GSPC) sank 0.6%, while contracts on the Dow Jones Industrial Average (^DJI) fell by the same percentage, or approximately 190 points. Futures on the tech-focused Nasdaq Composite (^IXIC) were reduced by 0.7%.
A recent uptrend in equity markets lost steam after that strong October retail sales data offset hopes for a change in central bank policy recently revived by a a series of reports of lighter inflation. Ann lost profits from Target also weighed on sentiment in Wednesday’s session, with the company citing inflation and a deteriorating economic environment ahead of the key holiday market season.
Other peers in the sector performed better during the period.
Macy’s (M) shares jumped more than 9% before the open after the department store giant beat estimates and raised its full-year profit guidance, boosted by strong demand in the luxury areas of its business. on a spike (KSS), meanwhile, beat earnings expectations but withdrew its full-year outlook due to “significant” macroeconomic headwinds and an unexpected change in its CEO. Shares fell 4% in premarket trading.
Shares of Bath & Body Works (BBWI) jumped nearly 22% in extended trading Thursday after the personal care and home fragrance maker lset your profit forecast for the full year. Retailers Walmart (WMT), Lowe (LOW), Home Depot (HD), all beat analysts’ estimates.
Elsewhere, as earnings season reaches its final stage, Nvidia (NVDA) Chief Executive Officer Jensen Huang said strong demand for the chips would help the company weather potential economic challenges — an assurance that was enough to offset the losses in his gaming business. Shares rose about 1.5% before the open.
Machine manufacturer Cisco Systems (CSCO) shares jumped 4% in premarket hours after the company provided a positive outlook for earnings and said it is cutting its workforce and reducing office space.
Meanwhile in Washington DCRepublicans won a majority in the House of Representatives Wednesday brought a split in control of the US Congress, a positive sign for investors as stocks have historically performed better in times of political gridlock.
Still, strategists say inflation and economic conditions remain the focus of markets. Principal Asset Management’s chief global strategist Seema Shah said the result should be “largely irrelevant to the broad market outlook.”
“Instead, historically elevated inflation, the Fed’s inflationary response and the resulting recession risk, combined with key structural policy decisions, will determine the market’s direction.”
On that front, investors are in for a fruitful day of Fedspeak, with several members of the Federal Reserve scheduled to make public remarks across the country on Thursday.
Federal Reserve Bank of San Francisco President Mary Daley said Wednesday in an interview with CNBC that a speed break is currently not an option while stating that the federal funds rate could reach the 4.75%-5.25% range.
Federal Reserve Gov. Christopher Waller said Wednesday that the latest economic data made him more comfortable with the possibility of a 50 basis point hike at the central bank’s December meeting.
Goldman Sachs, despite forecasting a 0.50% hike next month, added another quarter-point hike in May 2023 to its outlook, raising its expectations for the peak federal funds rate to 5-5.25%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc