U.S. equity futures moved lower Friday, although investors are braced for another whipsaw session on Wall Street as volatility gauges leap, the dollar soars and and Treasury yields climb ahead of a key reading of the domestic jobs market prior to the start of trading.
The past two sessions on Wall Street, in fact, have seen the biggest swings for U.S. stocks in more than two years, with the S&P 500 rising the most since April 2020 and Wednesday following a dovish take on the Federal Reserve’s 50 basis point rate hike, and the Dow plunging more than 1,000 points for its biggest single-day decline since October of 2020 on Thursday.
More of the same is possible on Friday, as well, with the CBOE’s benchmark volatility index, the VIX, trading 29.4% higher at 32.89 points, the highest since early March.
A litany of Fed speakers later today — including John Williams, Neel Kashkari and Ralph Bostic, all of whom are scheduled for public remarks prior to the close of trading — will also add to the market’s embedded uncertainty.
The Fed Governors will need to lean against the serious concern investors are also proving to have for the credibility of Fed Chairman Jerome Powell, who triggered Wednesday’s rally in part by stressing that the central bank is not “actively considering” a 75 basis point rate hike in June. The CME Group’s FedWatch tool, however, suggests rate traders are placing a 91.5% probability on just such a move in six weeks’ time.
That’s pushed the U.S. dollar index, which tracks the greenback against a basket of six global currencies, to a fresh 20-year high of 100.04 in overnight trading, while benchmark 10-year Treasury note yields are hovering at the highest levels in three-and-a-half years and were last seen trading at 3.093%.
Oil was also back on the march after hitting a five-week high yesterday following OPEC’s decision to maintain its path for only modest output increases over the coming months as cartel members fret over slumping demand in China linked to its ongoing Covid crisis.
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WTI futures for June delivery were marked $2.07 higher at $110.33 pe barrel while Brent contracts for July added $2.25 to trade at $113.12 per barrel.
Last night’s sell-off on Wall Street, which extended the S&P 500’s year-to-date decline to around 13%, bled quickly into the Asia session, with the region-wide MSCI ex-Japan index falling 2.77%. European stocks fared only marginally better, with the Stoxx 600 slumping 1.34% in early Frankfurt trading and Britain’s FTSE 100 down 0.88% in London.
Back on Wall Street, futures contacts tied to the Dow Jones Industrial Average indicating a 160 point opening bell decline ahead of the April jobs report at 8:30 am Eastern time
U.S. employers likely added nearly 400,000 new jobs into the economy last month according to analysts’ forecasts for Friday’s April employment report, pulling the headline employment rate to a multi-decade low of 3.5%.
The figures, however, belie one of the most complicated labor markets in U.S. history, marked by a record rate of jobs quits over the month of March, and data showing some 11.55 million positions remain unfilled in the world’s biggest economy.
Futures linked the S&P 500 priced for a 29 point retreat. Futures linked to the tech-focused Nasdaq are looking at a 110 point opening bell dip.
Boeing (BA) – Get Boeing Company Report shares were an interesting early mover, rising 0.15% after the world’s biggest planemaker said it will relocate its corporate headquarters to the suburbs of Washington, D.C.
Zillow ZG shares slumped 10% after the online real estate platform forecast softer-than-expected near-term revenues amid a surge in residential mortgage rates that could trigger a broader slowdown in the housing market.
DoorDash DASH shares, meanwhile, jumped 7% after the food delivery specialists posted stronger-than-expected first quarter sales and issued a robust near-term outlook for customer orders and overall activity.