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Futures fall as investors assess mixed economic data

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2022-11-17T13:14:46Z

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 15, 2022. REUTERS/Brendan McDermid

U.S. stock index futures were lower on Thursday as investors assessed mixed economic data for clues on the path of future rate hikes by the Federal Reserve, while Kohl’s shares fell after the department store chain withdrew its annual forecasts.

Softer-than-expected inflation data in recent days had boosted expectations of smaller interest rate increases, but strong retail sales figures on Wednesday stoked concerns that the Fed could keep tightening monetary policy further.

“Wall Street was rattled by a conflicting retail picture,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“Overall sales were stronger than expected showing consumer resilience had not been knocked by super-sized interest rate hikes aimed at pulling down the price spiral. This has added to expectations that higher rates will have to linger for a lot longer to make a difference.”

Wall Street closed the previous session lower as a grim outlook from Target Corp (TGT.N) sparked concerns about retailers heading into the crucial holiday season.

“There’s still some thought about the Target news of yesterday … investors are trying to understand how weak the fourth quarter might look and its impact on companies,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

The S&P 500 (.SPX) is up 8% from its October closing lows on hopes of a less hawkish Fed, though the index is down 17% so far this year on fears of a recession stemming from the hefty interest rate hikes.

J.P.Morgan economists predict a “mild recession” in the United States in the back half of next year.

Focus will also be on housing starts and initial jobless claims figures, due at 8:30 a.m. ET, to gauge economic health.

Meanwhile, UK finance minister Jeremy Hunt on Thursday raised taxes on higher earners and energy companies as part of his new plan to shore up Britain’s finances, even as he forecast the economy will shrink next year.

At 7:33 a.m. ET, Dow e-minis were down 232 points, or 0.69%, S&P 500 e-minis were down 29.5 points, or 0.74%, and Nasdaq 100 e-minis were down 80.25 points, or 0.68%.

Chipmaker Nvidia Corp (NVDA.O) rose nearly 1% in premarket trading on Thursday after beating quarterly revenue estimates on strong demand in its data center business.

Department store chain Macy’s Inc (M.N) gained 8.1% and personal care products retailer Bath & Body Works Inc (BBWI.N) surged 21.5% after raising their annual profit forecasts.

Kohl’s Corp (KSS.N) slipped 3.9% after the company pulled its 2022 sales and profit forecasts, blaming an uncertain economic outlook and the departure of top boss Michelle Gass.

U.S.-listed shares of Alibaba Group Holding Ltd fell 1.2% after the Chinese e-commerce giant posted a smaller-than-expected rise in quarterly revenue.

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