Market Snapshot: S&P 500 struggles to hold gains as Powell says no guarantee of soft landing for U.S. economy

U.S. stock futures struggled for direction on Wednesday, leaving Wall Street potentially on course for a third consecutive day of losses, as investors fret that soaring inflation is damaging the world’s biggest economy and battering corporate profits.

How are stock-index futures trading?

S&P 500 index futures

rose 0.1% to 3,829.75

Dow Jones Industrial Average futures

rose 48 points, or 0.1%, to 30,978

Nasdaq-100 futures

rose 0.1% to 11,688.75

On Tuesday, the Dow Jones Industrial Average 

fell 491.27 points, or 1.6%, to end at 30,946.90. The S&P 500 

fell 2% to close at 3,821.55. The Nasdaq Composite 

dropped 3% to 11,181.50.

All three booked their worst daily percentage declines since June 16, according to Dow Jones Market Data.

What’s driving markets?

Equities are limping towards the end of a miserable first half of the year. The S&P 500 is down 19.6% so far in 2022, hit by concerns that inflation rates at multi-decade highs are badly damaging household sentiment and that the Federal Reserve’s response to surging prices may tip the economy into recession.

On Tuesday, the Conference Board’s consumer-confidence index dropped in June to a 16-month low of 98.7, with consumers’ outlook on the state of the economy at the most cautious in nearly 10 years. The news helped turn early gains for Wall Steet into heavy losses, with the Nasdaq Composite shedding 3%, leaving the tech-heavy index nursing a loss of 28% for the year to date.

“Last week, U.S. equity markets rallied on the back of the arcane logic that a U.S. recession would mean a lower terminal Fed funds rates and thus, was bullish for stocks… That premise was boosted by weak Michigan Consumer Sentiment data,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.

“Overnight, even weaker U.S. Conference Board Consumer Confidence data provoked the opposite reaction, with U.S. stocks plummeting,” he added.

Wall Steet’s dive left Asian and European bourses floundering. Hong Kong’s Hang Seng

fell 2.5% and the Nikkei 225

in Japan slipped 0.9%. China’s Shanghai Composite

shed 1.4% after president Xi Jinping reiterated that the regime’s strict Covid-19 policy was “correct and effective”.

The comments added to worries that supply constraints in China could exacerbate global inflationary pressures. And such concerns were illustrated in Spain on Wednesday, where data showed prices rising by 10.2% in June, their fastest pace in 37 years. Europe’s Stoxx 600

fell 0.7%.

Oil prices crept higher, with WTI crude
which jumped $10 in the previous four sessions, up 0.3% to $112.24 a barrel.

The yield on the US 10-year Treasury bond

eased 4 basis points to 3.156% ahead of U.S. first quarter GDP data, due for release before Wall Street’s open.

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