U.S. stock futures sank Friday morning and looked to end a volatile month lower, as a fresh set of mixed quarterly results from some major technology companies weighed on index futures.
Contracts on the S&P 500, Dow and Nasdaq each declined. Shares of tech juggernaut Amazon slid after the company unexpectedly posted a quarterly loss and offered a weaker-than-expected current-quarter forecast. Apple’s stock also declined even after the iPhone-maker exceeded quarterly sales and profit estimates, though the company still cited ongoing supply chain constraints.
A day earlier earlier, the S&P 500 closed out Thursday’s session sharply higher, gaining 2.5%, while the Nasdaq Composite rose by 3.1% in its best day since March 16. But even with these marked gains, the S&P 500 was still on track to post its third monthly decline in four months.
Volatility has resurged in recent weeks amid concerns over whether tighter monetary policies from the Federal Reserve might derail the economy. And these fears compounded with lingering jitters over persistent inflation, geopolitical turmoil and an ongoing COVID outbreak in China. The S&P 500 was on track for an about 5% drop in April, based on Thursday’s closing level.
“There’s a lot of rerating going on, whether it’s the rerating of equity valuations, the rerating of interest rate expectations, or the rerating of inflation expectations, against tightening happening at the Fed,” Todd Jablonski, Principal Global Asset Allocation chief investment officer, told Yahoo Finance Live. “The threats of a slower economy, the threats of inflation, and the threats of higher energy prices out of the conflict in Ukraine [are] all sort of coming together to really stymie investor confidence and sentiment.”
Plus, the data this week on corporate profits and the broad economy have shown signs of decelerating growth. Results from Big Tech companies including Alphabet and Twitter pointed to a slowdown in online ad businesses as companies pull back on marketing spending in the wake of moderating consumer demand. And throughout this earnings season, a plethora of companies across industries have pointed to elevated input and labor costs, as well as ongoing supply chain disruptions.
Against this backdrop, the U.S. economy contracted for the first time since the second quarter of 2020 at the start of this year, government data Thursday showed. The 1.4% annualized contraction in first-quarter U.S. GDP came as net trade, inventories and government investment each weighed on overall domestic output, and as consumer spending came in less robustly than expected.
However, the weaker-than-expected GDP print may also bolster the case for members of the Federal Reserve to exercise more caution as they prepare to raise interest rates further and begin rolling assets off the central bank’s balance sheet. These moves would raise borrowing costs and help bring down demand to stem inflation — but also risk tipping the economy into a deeper downturn if financial conditions tighten too quickly.
“There’s just so much concern around, do we go into a recession in the next 24 months because the Fed may just raise interest rates too much?” Ryan Payne, Payne Capital Management president, told Yahoo Finance Live. “I think that’s what’s really weighing on the markets, and more so than the fact that we have a war in Ukraine and these inflationary numbers have just been through the roof.”
8:32 a.m. ET: PCE inflation accelerates to 6.6% year-over-year rate in March
A closely watched measure of inflation ramped further in March, further underscoring the widespread inflationary pressures present across the U.S. economy.
The Bureau of Economic Analysis said Wednesday that personal consumption expenditures (PCE) increased at a 0.9% monthly rate in March compared to a 0.5% rate in February. On a year-over-year basis, PCE rose 6.6%, also accelerating compared to the 6.3% clip during the prior month.
However, excluding volatile food and energy prices, core PCE inflation showed some signs of moderating. Core PCE rose 0.3% in March to match February’s rate. And over last year, the core PCE increased by 5.2%, slowing from February’s downwardly revised rate of 5.3%.
7:31 a.m. ET Friday: Stock futures hold overnight losses
Here’s where markets were trading Friday morning ahead of the opening bell:
S&P 500 futures (ES=F): -38.25 points (-0.89%) to 4,245.25
Dow futures (YM=F): -153 points (-0.45%) to 33,675.00
Nasdaq futures (NQ=F): -160.75 points (-1.19%) to 13,294.00
Crude (CL=F): +$1.22 (+1.16%) to $106.58 a barrel
Gold (GC=F): +$25.70 (+1.36%) to $1,917.00 per ounce
10-year Treasury (^TNX): +0.8 bps to yield 2.871%
6:11 p.m. ET Thursday: Stock futures sink as Amazon, Apple shares decline
Here’s where stocks were trading Thursday evening:
S&P 500 futures (ES=F): -35.75 points (-0.83%) to 4,247.75
Dow futures (YM=F): -62 points (-0.18%) to 33,766.00
Nasdaq futures (NQ=F): -219.5 points (-1.63%) to 13,235.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.