© Reuters
By Peter Nurse
Investing.com — U.S. stocks are seen opening lower Thursday, continuing the previous session’s broad selloff as evidence of reduced consumer spending in the face of severe inflationary pressures sparked worries about a sharp economic slowdown.
At 7 AM ET (1100 GMT), the contract was down 320 points, or 1%, traded 40 points, or 1.1%, lower and dropped 130 points, or 1.1%.
The main equity indices on Wall Street slumped on Wednesday after a weak earnings by the discount retailer Target (NYSE:), which suggested inflation was hitting corporate earnings, sparked a broad selloff across market sectors.
The blue-chip closed over 1,100 points, or 3.6% lower at its lowest level since March 2021, suffering its biggest decline since June 2020. The broad-based dropped 4%, its largest fall since June 2020, while the tech-heavy slumped 4.7%.
Federal Reserve Chairman warned earlier this week that the U.S. economy could be hurt by attempts to reduce inflation, saying the U.S. central bank will “keep pushing” to tighten monetary policy until it is clear that inflation is declining.
“Over the last couple of years, it is profit margins that have been the main driver of U.S. inflation rates, and so as markets come to consider what a lower inflation rate might mean, that may require a reassessment” of stock valuations, said Paul Donovan, chief economist with UBS Global Wealth Management, in this morning’s briefing.
More retail earnings come out in the next few days, starting with Kohl’s (NYSE:) and BJ’s Wholesale (NYSE:) later in the session.
Elsewhere, Cisco (NASDAQ:) stock fell over 12% in premarket trading after the technology conglomerate cut its full-year earnings forecast on Wednesday with COVID lockdowns in China and the war in Ukraine weighing on third-quarter sales.
Tesla (NASDAQ:) will be in the spotlight after the electric car manufacturer was removed from the widely followed S&P 500 ESG Index because of issues including crashes linked to its autopilot vehicles, while Ford (NYSE:) announced the recall of 39,000 SUVs after reports of 16 fires.
As far as economic data is concerned, the weekly release should show continued strength in the labor market, while the for May is expected to show weakening sentiment.
Oil prices slumped Thursday, continuing the previous session’s weakness on concerns an economic slowdown will hit demand at the world’s largest consumer of crude.
Additionally, Reuters reported that U.S. President Joe Biden’s administration will authorize Chevron (NYSE:) to negotiate with Venezuelan President Nicolas Maduro’s government in the near future, raising hopes that the market could see some additional supplies.
By 7 AM ET, futures traded 1.8% lower at $105.16 a barrel, while the contract fell 1.3% to $107.74. Both contracts fell around 2.5% on Wednesday.
Additionally, rose 0.6% to $1,827.12/oz, while traded 0.2% higher at 1.0487.
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