Friday June 17th


Stock futures rise, but Wall Street still on track for sharp weekly losses

U.S. stock index futures rose Friday as Wall Street attempted to find its footing after a brutal week of selling. Futures tied to the Dow Jones Industrial Average gained 160 points, or 0.5%. Those for the S&P 500 advanced 0.7%, while Nasdaq 100 futures climbed 1%. The moves come as investors are increasingly worried about a potential economic slowdown. Several key pieces of economic data fell short of forecasts this week, ranging from May retail sales to housing starts, and the Federal Reserve raised its benchmark interest rate by the most since 1994. “This week was brutal. ... Let me tell you, we’re in a recession,” Wharton Business School professor Jeremy Siegel said Thursday on CNBC’s “Closing Bell: Overtime.” “It’s a mild recession. It’s not an official recession by the NBER, certainly not yet, but this first half is negative GDP growth, and it’s ending on a slide.” Market volatility could be heightened Friday thanks to “quadruple witching.” This refers to the simultaneous expiration of stock index futures, single-stock futures, stock options and stock index options. This event happens once a quarter and typically leads to a surge in trading volume, making for choppy trading action as traders close out positions. The S&P 500 is down 6% for the week through Thursday’s close, which would be its worst weekly performance since March 2020. All 11 of its sectors are at least 15% below their recent highs. The Dow, meanwhile, fell below 30,000 for the first time since January 2021 on Thursday. The 30-stock average is down 4.7% for the week, on track for its 11th negative week in 12. The tech-heavy Nasdaq Composite has been hit even harder, and is down 6.1% for the week. Comments from the Federal Reserve Chairman Jerome Powell on Friday echoed the central bank’s commitment to tamping down inflation after hiking rates by 75 basis points earlier this week.″ The Fed is “acutely focused on returning inflation to our 2 percent objective,″ he said. “The risks of a recession are rising, while achieving a soft landing for the US economy appears increasingly challenging,” wrote UBS’ Mark Haefele. “Against this backdrop, we now see less upside for stocks this year, with slowing economic growth weighing on profit growth and higher bond yields depressing valuations,” he added. On the earnings front, software giant Adobe reported a better-than-expected second quarter but delivered disappointing full-year guidance. Shares fell more than 4% in premarket trading. Friday is a relatively light day for economic data, with industrial production data for May due out before the opening bell. Shares in Asia-Pacific struggled for direction on Friday, following sharp declines on Wall Street as investors weighed the possibility of aggressive monetary policy tightening leading to a recession. The Nikkei 225 in Japan fell 1.77% to close to 25,963 as shares of conglomerate SoftBank Group plunged 4.24% while the Topix index shed 1.71% to 1,835.90. South Korea’s Kospi declined 0.43% to end the trading day at 2,440.93. In Hong Kong, the Hang Seng index recovered from earlier losses to rise 1.15%, as of its final hour of trading. Shares of life insurer AIA climbed more than 2%. Mainland China stocks closed higher, with the Shanghai Composite up 0.96% to 3,316.79 while the Shenzhen Component gained 1.483% to 12,331.14. Oil rose on Friday, supported by supply tightness and new sanctions on Iran, but prices were on track for a weekly decline amid interest rate hikes from major central banks that fuelled worries about a sharp economic slowdown. Brent crude was up 53 cents at $120.36, and U.S. West Texas Intermediate (WTI) crude had gained 37 cents to $117.96. Both contracts had fallen by more than $1 earlier in the session. Spot gold fell on Friday, as a higher dollar and rising U.S. Treasury yields weighed on demand for greenback-priced bullion, and put prices on track for their biggest weekly drop since mid-May. Spot gold dropped 0.6% to $1,845.86 per ounce. U.S. gold futures dipped slightly 0.1% to $1,848.5. Gold prices have fallen about 1.1% in what has been a volatile week, after starting it near a one-month peak before hitting a four-week low on Tuesday.