Stock futures were lower in early morning trade on Friday as the S&P 500 tried to avoid another week of losses amid busy earnings and rising bond yields.
Futures on the Dow Jones Industrial Average fell 80 points, or 0.2%. S&P 500 futures fell 0.2% and Nasdaq 100 futures traded just below the zero line.
Early morning action followed a dramatic reversal on Thursday, with the major averages erasing earlier gains and closing lower. The Dow ended the day more than 300 points lower, while the S&P 500 was down almost 1.5%. The tech-heavy Nasdaq Composite bore the brunt of the bullish sell-off, slipping 2%.
“Fear of stagflation is re-emerging on real-time signs of a tight labor market and declining business sentiment coupled with a further upleg in 10-year Treasury yields — all punctuated by a spate of earnings releases,” said Chris Hussey, a managing director at Goldman Sachs , says a note.
This week, the Dow is up 1% and on course to break a three-week losing streak. The S&P is up less than 0.1% this week, trying to break a two-week losing streak. However, the Nasdaq is down 1.3% so far this week and is on track to post its third negative week in a row.
Sentiment was weighed on Thursday by Federal Reserve Chair Jerome Powell’s comment on the possibility of a larger-than-usual rate hike next month.
Powell said during an International Monetary Fund panel moderated by CNBC’s Sara Eisen that taming inflation is “absolutely essential” and a 50 basis point hike is on the table for May.
After turning higher on Powell’s comments, the 10-year Treasury yield closed at 2.92% on Thursday. The 10-year yield was higher again on Friday, slowly recovering to 2.94%, near a three-year high.
Meanwhile, the earnings season for the first quarter continues.
Snap shares fell 3% in premarket trading as the social media platform reported better-than-expected first-quarter revenue despite reporting strong growth in daily users.
Gap shares plunged 13% in premarket trading after the company announced that Old Navy division CEO Nancy Green is leaving the company this week. Gap also lowered its guidance for net sales growth in fiscal 2022.
American Express shares are down about 1% premarket even as the company reported hits to quarterly earnings and sales.
Verizon is scheduled to release results before Friday.