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Dow Futures Down 320 Pts; Economic Slowdown Fears Weigh

Stock Markets May 19, 2022 06:52AM ET
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© Reuters

By Peter Nurse

Investing.com -- U.S. stocks are seen opening lower Thursday, continuing the previous session’s broad selloff as evidence of reduced consumer spending in the face of severe inflationary pressures sparked worries about a sharp economic slowdown.

At 7 AM ET (1100 GMT), the Dow Futures contract was down 320 points, or 1%, S&P 500 Futures traded 40 points, or 1.1%, lower and Nasdaq 100 Futures dropped 130 points, or 1.1%.

The main equity indices on Wall Street slumped on Wednesday after a weak earnings report by the discount retailer Target (NYSE:TGT), which suggested inflation was hitting corporate earnings, sparked a broad selloff across market sectors.

The blue-chip Dow Jones Industrial Average closed over 1,100 points, or 3.6% lower at its lowest level since March 2021, suffering its biggest decline since June 2020. The broad-based S&P 500 dropped 4%, its largest fall since June 2020, while the tech-heavy Nasdaq Composite slumped 4.7%.

Federal Reserve Chairman Jerome Powell warned earlier this week that the U.S. economy could be hurt by attempts to reduce inflation, saying the U.S. central bank will "keep pushing" to tighten monetary policy until it is clear that inflation is declining.

“Over the last couple of years, it is profit margins that have been the main driver of U.S. inflation rates, and so as markets come to consider what a lower inflation rate might mean, that may require a reassessment” of stock valuations, said Paul Donovan, chief economist with UBS Global Wealth Management, in this morning's briefing.

More retail earnings come out in the next few days, starting with Kohl's (NYSE:KSS) and BJ's Wholesale (NYSE:BJ) later in the session. 

Elsewhere, Cisco (NASDAQ:CSCO) stock fell over 12% in premarket trading after the technology conglomerate cut its full-year earnings forecast on Wednesday with COVID lockdowns in China and the war in Ukraine weighing on third-quarter sales.

Tesla (NASDAQ:TSLA) will be in the spotlight after the electric car manufacturer was removed from the widely followed S&P 500 ESG Index because of issues including crashes linked to its autopilot vehicles, while Ford (NYSE:F) announced the recall of 39,000 SUVs after reports of 16 fires.

As far as economic data is concerned, the weekly initial jobless claims release should show continued strength in the labor market, while the Philadelphia Fed manufacturing index for May is expected to show weakening sentiment. 

Oil prices slumped Thursday, continuing the previous session’s weakness on concerns an economic slowdown will hit demand at the world’s largest consumer of crude.

Additionally, Reuters reported that U.S. President Joe Biden's administration will authorize Chevron (NYSE:CVX) to negotiate with Venezuelan President Nicolas Maduro's government in the near future, raising hopes that the market could see some additional supplies.

By 7 AM ET, U.S. crude futures traded 1.8% lower at $105.16 a barrel, while the Brent contract fell 1.3% to $107.74. Both contracts fell around 2.5% on Wednesday.

Additionally, gold futures rose 0.6% to $1,827.12/oz, while EUR/USD traded 0.2% higher at 1.0487.

Dow Futures Down 320 Pts; Economic Slowdown Fears Weigh
 

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Comments (6)
Mitchel Pioneer
Mitchel Pioneer May 19, 2022 8:06AM ET
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Loss mitigation underway in the pre-market.  Of course, the laughingstock of the financial world is a "bargain," so savvy "investors" are loading up in index futures.  What a joke.  Just who is really "buying," knowing full well the US Ponzi Scheme has another 50% to fall?
Elvis Durant
Elvis Durant May 19, 2022 8:06AM ET
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not so sure about 50% but definitely heading south
Tyrone Jackson
Tyrone Jackson May 19, 2022 7:45AM ET
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Panic is starting to set in . Just watch this fraud crash
Edward Chong
Edward Chong May 19, 2022 7:45AM ET
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oh today will rebound. cos a lot of shorts . watch
Nonthiphat Sukwasana
Nonthiphat Sukwasana May 19, 2022 7:26AM ET
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20,000 is comming
Chris Vu
Chris Vu May 19, 2022 7:26AM ET
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In your dream
Santiago Pássera
Santiago Pássera May 19, 2022 7:23AM ET
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Target's missed revenue among other retailers, Kevin.
FMGK Blue
FMGK Blue May 19, 2022 7:23AM ET
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Nothing to do with economic concerns. Options expiry tomorrow. 1.3trl USD rolling off. Market short gamma. Purely technical. Exacerbates moves both ways.
Kevin Ryan
Kevin Ryan May 19, 2022 7:18AM ET
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More trash! What economic slow down are you referring to? The unemployment rate is almost 3% wgich represents full employment. Why are people writting these articles
rajesh vairale
rajesh vairale May 19, 2022 7:18AM ET
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This is corporate strategy,more fear more earn!
James Johannsen
James Johannsen May 19, 2022 7:18AM ET
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those numbers are fake like the rest of them look at people not in the labor force
 
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