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Stock Futures Pause After Wild Ride




Stock futures wobbled as investors worried about the speed at which the Federal Reserve would move to lift interest rates, and awaited more earnings from major consumer and technology companies.

Futures tied to the S&P 500 wavered between small gains and losses, after declining more than 1% earlier Thursday. Nasdaq-100 futures rose 0.5% and Dow Jones Industrial Average futures were flat.

The Stoxx Europe 600 fell 0.2%, reversing direction after advancing moderately. Asia-Pacific indexes fell sharply, with gauges in China, Japan and South Korea hitting their lowest closing levels in more than a year.

The moves came after a bout of volatility in the US stock market that saw indexes swing wildly this week. The VIX hit its highest level in a year on Wednesday. Markets have been buffeted by concerns about central-bank policy around interest rates and inflation and geopolitical tensions over Russia.

To temper elevated inflation, Federal Reserve Chairman Jerome Powell said the central bank intends to raise short-term interest rates in mid-March. Photo: Federal Reserve

Earnings season is ongoing and is seen as the next big test of whether the stock market’s sky-high valuations can be justified.

McDonalds shares fell nearly 3% premarket after the company missed analysts’ profit estimates, despite a sales boost. Blackstone rose 3.5% after it reported that net income nearly doubled. Comcast climbed 2% after it raised its dividend and increased its budget for share buybacks, while also reporting a slowdown in broadband growth and profit.

“What I’m looking for this earnings season is inflationary pressures and margins — if companies are able to hold on to their profits,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. said. “Are they able to pass along prices, are they able to maintain pricing power?” As central banks rein in liquidity, that is what becomes really important, he added.

On Wednesday, the Fed signaled it would start raising interest rates in mid-March, its latest step toward removing stimulus to bring down inflation. Fed Chairman Jerome Powell said the central bank could continue to lift rates faster than it did during the past decade.

The news shows the central bank “is in a hurry,” said John Vail, chief global strategist at Nikko Asset Management in Tokyo. “The Fed got really fast and it’s having an effect on markets.”

The yield on the benchmark 10-year Treasury note edged down to 1.824% Thursday from 1.845%. Shorter-dated government bonds continued to sell off, with the two-year Treasury yield rising to 1.208%, notching a new pandemic high.

The greenback strengthened, with the WSJ Dollar Index rising to the highest level in nine weeks.

“The yields in the US have gone up as the path of rate hikes increases. There’s a bit of a safe-haven play mixed in there as well, that will be a support environment for the dollar, ”said Mr. Kamal.

Earnings season is seen as the next big test of whether sky-high valuations can be justified.


Photo:

Allie Joseph / Associated Press

Mastercard is set to post results before Thursday’s opening bell. Apple,

Visa and food and beverage giant Mondelez are due to report after markets close.

Tesla shares declined 1.1% premarket after the electric-vehicle maker posted a record profit. Chief Executive Elon Musk said he would not introduce new models this year and that the company had been affected by supply-chain disruptions.

Netflix rose 4.6% premarket after billionaire investor William Ackman said his hedge fund had bought 3.1 million shares. Moderna climbed 3% after the company said it has started testing a version of its Covid-19 vaccine modified to target the Omicron variant.

Teradyne,

an equipment manufacturer, tumbled 16% premarket after its profit guidance for missed analysts’ expectations. Records showed that company insiders have sold thousands of shares in recent days. Software firm ServiceNow rose nearly 12% after beating Wall Street’s estimates on revenue.

Data on gross domestic product in the final quarter of 2021 will go out at 8:30 am ET. Economists forecast the economy grew at a solid pace, propelled by consumer spending, business investment and efforts to rebuild inventories. Momentum may have been affected in recent weeks by the Omicron.

Fresh data on jobless claims, a proxy for layoffs, will also be released at 8:30 am Analysts are anticipating a decline amid a tight labor market. Information on orders for durable and capital goods in December is scheduled for the same time.

Cryptocurrencies edged up, with bitcoin extending its decline into a third day to trade around $ 36,450. Meta Platforms,

formerly known as Facebook, is winding down its plans to build a cryptocurrency payments network and is selling its technology to a small bank, The Wall Street Journal reported.

—Quentin Webb contributed to this article.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com, Suryatapa Bhattacharya at Suryatapa.Bhattacharya@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

Copyright © 2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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