Stock futures were lower on Friday morning as investors continued to exit stocks until the end of the year on fears of a recession next year due to relentless rate hikes by the Federal Reserve.
Futures linked to the Dow Jones industrial average lost 352 points, or 1%. S&P 500 futures fell 1% and Nasdaq-100 futures fell 0.8%.
Friday’s sell-off follows a tough day for markets. The Dow fell 764.13 points, or 2.25%, on Thursday for its worst daily performance since September. The S&P 500 and Nasdaq Composite fell 2.49% and 3.23%, respectively.
Thursday’s disappointing retail sales report Inflation hits consumers harder than expected. Investors worry that this is slowing consumer spending, a sign that the economy is weakening.
With these latest declines, the market heads into Friday as all indices are poised for a second consecutive week of losses. The S&P 500 is off 1% for the week and 4.5% for the month of December.
Stocks fell in response Federal Reserve raises interest rates by 50 basis points Wednesday – the highest rate in 15 years. The central bank said it would raise rates to 5.1% through 2023, a bigger figure than previously expected.
“Stock traders are experiencing indigestion after they were drawn in by hopes for the Fed’s centralization. [Wednesday’s] The FOMC report reiterated Jerome Powell’s theme of ‘bullish for the long run,'” said John Lynch, chief investment officer at Comerica Wealth Management.
Stocks hurt by the recession fell on Friday. Both GM and Caterpillar were off about 1.5% in premarket trading.
Investors will look to Friday’s before-bell earnings call from Olive Garden-parent Tartan Restaurants, which could provide more insight into consumer spending patterns. They’ll be looking for notes on future Fed policy from John Williams, Michael Bowman and Mary Daly. Investors are trying to gauge the pace of future rate hikes and the central bank’s view on the economy.
Data will follow in the morning along with purchasing managers’ indices for December in services and manufacturing.