U.S. stock-index futures on Thursday indicated Wall Street would attempt to recoup some of the losses suffered the previous session after Federal Reserve Chairman Jerome Powell dampened expectations for further interest rate cuts, following the central bank’s first rate cut in more than a decade on Wednesday.
Investors, meanwhile, continue to assess a steady stream of second-quarter earnings, while looking ahead to Friday’s July jobs report as an important hurdle.
How are the benchmarks faring?
Futures on the Dow Jones Industrial Average YMU19, +0.10% rose 48 points, or 0.2%, to 26,903, while S&P 500 futures ESU19, +0.03% were up 4.2 points, or 0.1%, at 2,986.50. Nasdaq-100 futures NQU19, +0.09% were up 20 points, or 0.3%, to 7,886.75.
The Dow DJIA, -1.23% and S&P 500 SPX, -1.09% on Thursday suffered their biggest one-day percentage losses since May 31. The Dow ended Thursday with a loss of 333.75 points, or 1.2%, at 26,864.27, while the S&P 500 fell 32.8 points, or 1.1%, to close at 2,980.38. The Nasdaq COMP, -1.19% fell 98.19 points to 8,175.42, a drop of 1.2% — the biggest one-day fall for the tech-heavy gauge since June 25.
Read: How the Fed and Jerome Powll sent ‘a bit of a shock wave’ through financial markets
What’s driving the market?
The Fed on Thursday cut interest rates by a quarter of a percentage point and moved to more quickly halt the end of its balance-sheet wind-down. Stocks wobbled after the policy announcement, but then tumbled after Powell played down the scope for further rate cuts in his news conference, describing the easing as a “mid-cycle adjustment.” Stocks pared losses after Powell clarified that Thursday’s cut wasn’t necessarily a one-time event.
In addition to the stock-market selloff, the U.S. dollar jumped and the Treasury yield curve flattened.
Read: Fed’s hawkish rate cut could be good for the stock market in the long run, analysts say
“An upside surprise in Friday’s nonfarm payrolls report may significantly lower expectations of further easing in the upcoming FOMC meeting in September, especially if wage growth beats market expectations,” said Hussein Sayed, chief market strategist at FXTM, in a note. “So, expect an upside surprise in tomorrow’s data releases to be negative news for equity markets and vice versa.”
Economists surveyed by MarketWatch, on average, look for July nonfarm payrolls to rise 171,000, while the unemployment rate is forecast to decline to 3.6% from 3.7%. Average hourly earnings are forecast to show a 0.2% rise.
But there’s also some important economic data on tap for Thursday, including the Institute for Supply Management’s July manufacturing index at 10 a.m. Eastern. It’s forecast to strengthen to 51.9% from 51.7% in June. A reading above 50 indicates an expansion in activity. Also Thursday, weekly jobless claims due at 8:30 a.m. Eastern are expected to show first-time claims for benefits rose to 210,000 in the week ended July 27 from 206,000 the previous week.
See: Economic Calendar
Which stocks are in focus?
On the earnings front, shares of Dow component Verizon Communications Inc. VZ, -2.40% fell 2.4% before the start of trade Thursday, after the telecommunications giant beat Wall Street expectations for second-quarter earnings, but fell short on revenue.
Qualcomm Inc. QCOM, -2.21% announced third-quarter earnings Wednesday after the close of trade. Shares are down 7.4% in off-hours trade after the chipmaker provided a downbeat outlook for fourth-quarter results, due in part to the recently instituted export ban to China’s Huawei Technologies Co.
Shares of General Motors Co. GM, -0.22% rose 1.6% after reporting second-quarter earnings Thursday.
Yum Brands Inc. YUM, -0.64% stock fell 0.6%, after the operator of of Taco Bell, Pizza Hut and KFC Restaurants reported declining earnings and revenue year-over-year, though both were better than expected.
Shares of Dunkin’ Brands Group Inc. DNKN, -1.76% were expected to be in focus after reporting a second-quarter profit and Dunkin’ same-store sales that beat expectations, while revenue and Baskin-Robbins same-store sales missed.
Jeff Bezos, chairman and chief executive of Amazon.com Inc. AMZN, -1.67% sold 968,148 shares worth $1.84 billion, according to filings with the Securities and Exchange Commission.
What’s happening in other markets ?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.56% rose nearly 3 basis points to 2.045%.
In commodities markets, the price of crude oil CLU19, -1.60% fell 1.4% to just below $58 per barrel, while gold prices GCQ19, -1.49% retreated 1.4% to $1407 per ounce.
In Asia overnight, stocks closed mostly lower, with China’s CSI 300 000300, -0.83% declining 0.8%, Japan’s Nikkei 225 NIK, +0.09% rose 0.1% and Hong Kong’s Hang Seng index HSI, -0.76% retreated 0.8%. In Europe, stocks were trading 0.4% higher, as measured by the Stoxx Europe 600 SXXP, +0.24%.
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