U.S. stock futures were slightly higher on Thursday morning after another choppy trading session as investors remained cautious amid rising rates and the Nasdaq dipped into correction territory.
Futures tied to the Dow Jones Industrial Average gained 123 points, or 0.22%. S&P 500 futures added 0.66% and Nasdaq 100 futures traded about 0.42% higher.
United Airlines shares fell about 1% in premarket trading after the company reported its quarterly results and warned that omicron has dented bookings and will delay its pandemic recovery.
Stocks held their ground even as government bond yields again edged higher, part of a market repricing as the Federal Reserve gets set to tighten monetary policy.
The central bank meets next week, with markets indicating just a slight chance of action on interest rates. However, traders have fully priced in the first of what is expected to be four 0.25 percentage point hikes through 2022.
The two-year Treasury, which is most closely tied to Fed rate policy, most recently yielded about 1.04%, while the benchmark 10-year note was at 1.84%.
Markets were looking ahead to more earnings reports as well as the weekly update on initial jobless claims and existing home sales.
Big regional banks Regions Financial and Fifth Third will report earnings Thursday before the bell, as well as American Airlines, Union Pacific and Baker Hughes. Netflix is the big name to watch Thursday. The streaming giant is set to report its quarterly results after the closing bell.
Ford Motor shares dropped 2.5% in premarket trading. The stock is coming off a meteoric surge in 2021 on hopes for its electric vehicle development, but Jefferies analysts said in a downgrade that the rally, which sent shares up 130% for the year, has gotten overdone.
On the economy, the Dow Jones estimate for claims in the week ended Jan. 15 is 225,000, slightly less than the 230,000 from the previous period. Home sales for December are expected to total 6.48 million, a modest 0.3% increase from November, which had posted a gain of 1.9%.
The Philadelphia Fed also will be reporting its monthly manufacturing survey for January, which is forecast to register a reading of 18.5%, which represents the difference between companies reporting expansion vs. those seeing contraction. Earlier this month, the New York Fed survey plunged unexpectedly to -0.5%, or a slight contraction, representing the omicron impact on business.
All of the data points are out at 8:30 a.m. ET.
In regular trading Wednesday, the Dow fell for the fourth day in a row, by 339 points, or 0.9%. The S&P 500 also fell 0.9%. The Nasdaq Composite closed down by 1.15% and now sits about 10% from its November record.
This year’s turbulence in tech stocks, set off by a spike in yields in the first week of January, continued Wednesday as the 10-year U.S. Treasury yield hit a high of 1.9%. It started the year at about 1.5%.
Brad McMillan, chief investment officer at Commonwealth Financial Network, acknowledged that the turbulence could last for some time but said investors shouldn’t panic about interest rate increases and that they’re normal as the economy returns to normal.
“The economy and markets can and do adjust to changes in interest rates,” McMillan said. “This environment is a normal part of the cycle and one we see on a regular basis. The current trend is perhaps a bit faster than we’ve been seeing, but it is a response to real economic factors–and, therefore, normal in context.”
In addition to growth stocks, banks also pulled back Wednesday, despite strong earnings reports from Bank of America and Morgan Stanley, both of which saw shares rise.
U.S. equities futures were higher on Thursday morning after another choppy trading session as investors remained cautious amid rising rates.