Stock futures fell on Thursday as interest rates jumped and Federal Reserve officials signaled that rate hikes to curb inflation are far from over.
Futures linked to the Dow Jones Industrial Average fell 316 points, or 0.9%. S&P 500 futures fell 1.1%, while Nasdaq-100 futures fell 1.2%.
The president of the Federal Reserve of St. Louis, James Bullard, said in a speech that “the political rate is not yet in an area that can be considered restrictive enough.”
“The change in the stance of monetary policy appears to have had only limited effects on observed inflation, but market prices suggest that disinflation is expected in 2023,” Bullard added.
The yield on the 2-year Treasury jumped to 4.42% on Thursday morning, raising fears that higher rates could send the economy into recession.
Stocks more vulnerable to a recession and higher rates led to losses in premarket trading. Financials led by Wells Fargo were lower. Tech stocks Tesla and Netflix declined.
The latest moves followed a down day on Wall Street, the second in three days. The S&P 500 and Nasdaq Composite fell 0.83% and 1.54%, respectively. The Dow Jones Industrial Average lost 39.09 points, or 0.12%.
The downward pressure came from weak guidance from Target, which reported a decline in sales as inflation pinches shoppers heading into the holiday season. The Minneapolis-based chain ended 13% lower, while its forward guidance cast doubt on other retailers.