Stock futures were lower on Friday morning as investors continued to dump stocks at the end of the year on fears of a recession ahead next year due to the Reserve Bank’s relentless rate hike federal
Futures linked to the Dow Jones Industrial Average lost 352 points, or 1%. S&P 500 futures lost 1% and Nasdaq-100 futures fell 0.8%.
Friday’s sell-off follows a tough day for markets. The Dow fell 764.13 points, or 2.25%, on Thursday for its worst daily performance since September. The S&P 500 and Nasdaq Composite fell 2.49% and 3.23%, respectively.
Thursday’s disappointing retail sales report suggested inflation is hitting consumers harder than expected. That has investors worried that consumer spending is slowing, a sign that the economy is weakening.
With these latest declines, the market enters Friday with all indices poised for a second consecutive week of losses. The S&P 500 is off 1% for the week and 4.5% for the month of December as hopes for a year-end rally falter.
Stocks have been falling since the Federal Reserve raised interest rates by 50 basis points on Wednesday, the highest rate in 15 years. The central bank said it would continue to raise rates to 5.1% until 2023, a higher figure than previously expected.
“After waiting for a Fed pivot, equity traders are experiencing indigestion for [Wednesday’s] FOMC statement, which reiterated Jerome Powell’s theme of “higher for longer,” said John Lynch, chief investment officer at Comerica Wealth Management.
Stocks that would suffer in a recession fell on Friday. GM and Caterpillar were down about 1.5% in premarket trading.
Investors will be watching Friday ahead of earnings from Olive Garden parent Darden Restaurants, which could provide more insight into consumer spending patterns. They will also look for suggestions on future Fed policy from speakers John Williams, Michelle Bowman and Mary Daly. Investors are trying to gauge the pace of future rate hikes and the central bank’s view of the economy.
There will also be data in the morning with the purchasing managers’ indexes for December in services and manufacturing.