U.S. stock index futures were lower on Thursday as news of another COVID lockdown in China revived concerns about a slowing global economy.How are stock-index futures trading
- S&P 500 futures ES00 dipped 25 points, or 0.6%, to 3931.
- Dow Jones Industrial Average futures YM00 fell 164 points, or 0.5%, to 31371.
- Nasdaq 100 futures NQ00 eased 107 points, or 0.9%, to 12176.
On Wednesday, the Dow Jones Industrial Average DJIA fell 308 points, or 0.96%, to 31791, the S&P 500 SPX declined 44 points, or 1.1%, to 3986, and the Nasdaq Composite COMP dropped 135 points, or 1.12%, to 11883. The S&P 500 has fallen for seven of the past nine trading days.
What’s driving markets
News of a COVID-19 lockdown in Chengdu, China, weighed on U.S. equity futures by reviving fears about global growth, while semiconductor stocks like Nvidia NVDA and Advanced Micro Devices AMD, which together command a weighting of 4.1% in the Nasdaq 100, slumped after the U.S. government restricted sales of certain products to China.
But the lockdown wasn’t the only piece of downbeat economic news out of China Thursday morning. The Caixin China purchasing managers index declined to 49.5 in August from 50.4 in July, falling below the 50-point mark that separates contraction from expansion, according to data released by Caixin Media Co. and S&P Global on Thursday.
U.S. equity futures also reacted negatively to Thursday’s report on weekly jobless benefit claims, which showed that the number of Americans applying for unemployment benefits fell to its lowest level in nine weeks.
U.S. stocks looked set to open lower on Thursday after the main U.S. benchmarks recorded a fourth straight loss on Wednesday. Meanwhile, Treasury yields continued to climb, with the two-year yield hitting a fresh 15-year high BX:TMUBMUSD02Y at 3.487%, while the 10-year Treasury yield BX:TMUBMUSD10Y climbed to 3.227%, its highest level since late June.
The S&P 500 has shed 5.8% since the close of trading on Thursday largely due to hawkish comments from Federal Reserve Chairman Jerome Powell, who said during a brief speech from Jackson Hole, Wyo. that the Fed would press ahead with interest-rate hikes and the unwind of its balance sheet even if it caused economic pain for households and businesses.
“Markets have been playing a familiar theme, with risk assets losing further ground as investors price in more rate hikes over the coming months,” said Henry Allen, strategist at Deutsche Bank, in a morning note.
Cryptocurrencies BTCUSD also declined on Thursday, with bitcoin tumbling back below $20,000 per coin, while news of the lockdowns in China weighed on oil prices, sending West Texas Intermediate crude futures CLV22 for delivery in October down 2%.
On Friday, investors will be on the lookout for non-farm payrolls data for August, which could have an impact on stocks since more evidence of a robust labor market could inspire the Fed to be even more aggressive.
How are other assets faring
- Global growth fears left oil prices near seven month lows, with U.S. WTI futures CL down 1.8% to $87.90 a barrel.
- The 10-year Treasury yield BX:TMUBMUSD10Y rose 1.6 basis points to 3.210%
- The ICE Dollar index DXY rose 0.2% to 108.93, just shy of 20-year highs, and this helped push gold GCZ22 down 0.8% to $1,713 an ounce.
- Bitcoin BTCUSD retreated 1.6% to $19,880.
- Asian and European bourses continued to track Wall Street lower. The Nikkei 225 JP:NIK in Japan lost 1.5% and the Stoxx 600 XX:SXXP fell 1.6%.