Dow Futures Down 355 Pts; Growth Concerns Weigh Heavily

© Reuters.

By Peter Nurse    

AiVIF.com -- U.S. stocks are seen opening sharply lower Thursday, with the quarter on course to end on a gloomy note as investors fret that aggressive rate hikes to curb red-hot inflation will result in a rapid slowing of economic growth.

At 07:00 AM ET (1100 GMT), the Dow Futures contract was down 355 points, or 1.1%, S&P 500 Futures traded 53 points, or 1.4% lower, and Nasdaq 100 Futures dropped 185 points, or 1.6%.

Sentiment is at a low ebb on Wall Street, with the Dow Jones Industrial Average and the S&P 500 on track for their worst quarter since the first three-month period of 2020 when COVID lockdowns sent the market into a tailspin. The tech-heavy Nasdaq Composite is set for its worst quarter since 2008, down more than 20% over the last three months.

Central bank chiefs from the Federal Reserve, European Central Bank, and Bank of England met in Portugal this week and voiced their renewed commitment to control inflation.

"The way to do that [curb inflation] is to slow down [economic] growth, but ideally keep it positive,” Fed chair Jerome Powell said on Wednesday, conceding that there “is a risk” that the monetary tightening could go too far and cause a recession.

Sweden's Riksbank continued the hiking theme Thursday, lifting its key interest rate by half a percent, adding it would run down its asset purchases faster than planned to stop inflation from becoming entrenched.  

The Fed’s fastest rate-hiking cycle in decades appears to be already slowing growth, with the final reading of first-quarter GDP revised down by 0.1% to a 1.6% contraction on an annualized basis.

Attention will now turn to the release of data on U.S. core prices later in the session, as well as personal income and spending data for May and the weekly initial jobless claims.

In the corporate sector, brewer Constellation Brands (NYSE:STZ) and pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) are set to post quarterly updates early Thursday, while semiconductor manufacturer Micron (NASDAQ:MU) is due after the market closes.

Oil traded largely flat Thursday, on course for its first monthly loss this year ahead of the latest meeting of top crude-producing countries.

The Organization of Petroleum Exporting Countries and allies is widely expected to confirm another modest production increase for August later Thursday, with limited room for a significant boost to output, given the group has struggled to meet its previously agreed production targets this year.

U.S. crude inventories fell by about 2.8 million barrels in the week to June 24, data from the Energy Information Administration showed, but gasoline stockpiles climbed as near-record prices likely encouraged people to stay closer to home.

By 07:00 AM ET, U.S. crude futures traded 0.6% lower at $109.13 a barrel, on course for a monthly loss of over 4%, while the Brent contract fell 0.4% to $111.98, set to drop over 2% in July.

Additionally, gold futures fell 0.4% to $1,810.70/oz, while EUR/USD traded 0.3% lower at 1.0406.