(Bloomberg) — A mixed performance in equity-index futures signaled a volatile day for the U.S. markets as concerns over inflation and monetary tightening offset earnings optimism driven by Amazon.com Inc. The dollar headed for the worst week since November 2020.
Contracts on the Nasdaq 100 Index rose 1%, after earlier gains of as much as 2.3%. Amazon gained 13% in premarket trading after announcing a price hike for Prime memberships. Futures on the Dow Jones Industrial Average and Russell 200 gauges fell, while those on S&P 500 added 0.2%. Oil was on course for a seventh weekly advance.
Friday’s volatility adds to the $251 billion wipeout for Facebook owner Meta Platforms Inc. on Thursday that sparked a global technology rout and pulled down U.S. indexes. While the overall earnings picture in the world’s largest economy remains robust, concerns over Federal Reserve tightening linger. Signs stubborn inflation increased after data showed U.S. gasoline prices surged to the highest in more than seven years.
Amazon’s posted premarket gains of 13%, implying an increase of $184 billion in its market capitalization if the stock rises by the same extent during regular trading hours.
While Meta’s sluggish numbers dominated the headlines on Thursday, the flurry of earnings releases showed they may be an exception rather than the rule. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimates. Profits are coming in at 8.8% above projected levels.
Still, volatility has become the hallmark of global markets this year. Investors are trying to come to grips with less favorable monetary conditions and a moderating global recovery amid stubborn inflation. The CBOE Volatility Index increased for a third day Friday, hovering just below 26.
“The first half this year we are now experiencing a rates shock,” Tracy Chen, portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “If the Fed and BOE and other emerging-market central banks are too aggressive in hiking interest rates, potentially we are going to face kind of a recession risk in the second half, or at least more slowdown in the economy.”
Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased, the mood in the stock market turned sour.
Europe’s Stoxx 600 fell 1% as rate-hike bets reduced risk appetite. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.
Treasuries advanced, with the 10-year rate shedding one basis point. The dollar was marginally lower, heading for a 1.4% decline this week.
Investors also awaited Friday’s official jobs report from the U.S., where they focused on wage growth to gauge the health of the economy and the potential for a further surge in inflation.
The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.
Earlier, An Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong, which was catching up with global markets after reopening from a holiday.
West Texas Intermediate hit a fresh seven-year high and traded above $92 a barrel. Brent has surged 19% this year and banks including Goldman Sachs Group Inc. forecast it’ll reach $100.
For more market analysis, read our MLIV blog.
What to watch this week:
- U.S. payrolls report for January, Friday
- Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.2% as of 7:56 a.m. New York time
- Futures on the Nasdaq 100 rose 1%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 fell 0.9%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.3% to $1.1470
- The British pound fell 0.3% to $1.3563
- The Japanese yen was little changed at 114.91 per dollar
Bonds
- The yield on 10-year Treasuries declined one basis point to 1.82%
- Germany’s 10-year yield advanced four basis points to 0.18%
- Britain’s 10-year yield was little changed at 1.36%
Commodities
- West Texas Intermediate crude rose 2.2% to $92.28 a barrel
- Gold futures rose 0.4% to $1,812.20 an ounce
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