U.S. stock futures fell on Wednesday after big growth stocks rallied in the previous session on fears of aggressive monetary tightening and slowing economic growth.
Large, rate-sensitive tech and growth companies such as Microsoft, Apple, Google parent Alphabet, Meta Platforms, Tesla and Amazon fell between 0.6% and 1.5% in premarket trading after a sharp rebound on Tuesday.
The yield on the benchmark 10-year U.S. Treasury note hovered around 3%. [us/]
The S&P 500 and Nasdaq closed up more than 2 percent in the previous session after strong retail sales in April eased concerns about slowing economic growth.
Tuesday’s rally comes after weeks of selling in U.S. stocks, with the S&P 500 last week on the verge of confirming a bear market from its record close on Jan. 3.
Federal Reserve Chairman Jerome Powell told the Wall Street Journal on Tuesday that the central bank will continue to “push” rate hikes until it sees a “clear and convincing decline in inflation” and won’t hesitate to act more aggressively if not This situation.
Traders see an 85.3% chance of a 50 basis point rate hike in June.
Charalambos Pissouros, head of research at JFD Group, said: “For now, it appears that he (Powell) is holding on to a 50 basis point hike in the next few meetings…”
“In this context, we cannot confidently say that the recent rally in equities is the beginning of a bullish reversal … We would view the current rally as a corrective move.”
Uncertainty over the Federal Reserve’s policy moves has weighed on markets of late, which have been rattled by concerns about a global economic slowdown due to conflicts in Ukraine, rising inflation, ongoing supply chain disruptions and China’s pandemic-related lockdowns.
So far in 2022, the S&P 500 is down 14.2% and the Nasdaq is down more than 23%, hit by growth stocks.
At 7:04 a.m. ET, the Dow Jones e-mini was down 112 points, or 0.34%, the S&P 500 e-mini was down 19.5 points, or 0.48%, and the Nasdaq 100 e-mini was down 86.25 points, or 0.69%.
Among other stocks, Target Corp fell 21.7% after the retailer’s first-quarter profit halved and warned that higher fuel and freight costs would lead to a bigger profit squeeze.
Lowe’s Cos Inc fell 2.5% after reporting a stronger-than-expected drop in same-store sales as demand for its home improvement tools and building materials retreated from pandemic highs.
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