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Main U.S. equity indexes fall: Dow leads losses, down >1%
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Energy weakest S&P 500 sector; comm svcs sole gainer
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Euro STOXX 600 index down ~0.5%
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Dollar rises; gold off; crude, bitcoin both decline >2%
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U.S. 10-Year Treasury yield slides to ~3.37%
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STOCKS RED: DATA, EARNINGS, BANKS DRAG (1021 EDT/1421 GMT) Wall Street's major indexes are lower early on Thursday as investors digest weaker than expected economic data and declines in large-cap companies such as Microsoft and Walt Disney Co are definitely not helping. While strategists welcomed weaker than expected data as a sign of easing inflation, which could give the Federal Reserve the leeway to pause rate hikes, still it didn't put the market in a good mood.
The S&P 500's biggest drag from a single stock is coming from Microsoft , which was down 1.2%. Another big drag is from Disney which is tumbling 9.0% after it reported shedding subscribers while it reduced its loss from its streaming business and reported quarterly earnings that met Wall Street's estimates. The S&P 500 energy sector is the weakest industry group out of 11 as oil prices fall. Communication services is the strongest sector as the drag from Disney is being countered by a sharp rally in Google parent Alphabet , which is up 5.0%. And the latest news in the banking sector may have dampened enthusiasm for the beleaguered group. The U.S. Federal Deposit Insurance Corporation's (FDIC) said on Thursday that around 113 of the country's largest lenders will bear the cost of replenishing the $16 billion hit to the agency's deposit insurance fund caused by recent bank failures. Regionals are underperforming with the KBW regional banking index down 1.97% vs a 1.3% S&P 500 bank sindex drop, which includes bigger banks and the biggest regionals. Embattled Pacwest Bancorp is down 18.3% at $4.97 Here is your morning snapshot at 1021 EDT:
(Sinéad Carew)
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U.S. STOCK FUTURES LITTLE CHANGED AFTER DATA (0900 EDT/1300 GMT) U.S. equity index futures are little changed in the wake of the release of the latest data on U.S. jobless claims and inflation. Initial jobless claims were greater than expected. The April PPI, on a month-over-month, and year-over-year basis came in below estimates. The month-over-month ex-food/energy print was in-line with the Reuters Poll, while on a year-over-year basis it was below the estimate:
According to the CME's FedWatch Tool, the probability that the FOMC will leave rates unchanged at their June 13-14 meeting is now 97% from 96% just before the numbers were released. There is now around a 3% chance of a 25 basis point rate increase vs 4% prior to the data coming out. The probability of a 25 basis point cut at the July meeting is now 47% from 39% before the numbers came out. CME e-mini S&P 500 futures are edging down vs roughly flat in the moments before the numbers came out.
A majority of S&P 500 sector SPDR ETFs are lower in premarket trade, but changes are relatively modest. Energy is taking the biggest hit, off about 0.8%, while communication services is leading gainers with a 0.25% rise. Meanwhile, with PacWest Bancorp sliding ahead of the open, the SPDR S&P regional banking ETF is quoted down more than 1.5%. Paul Hickey co-founder at Bespoke Investment Group was out with a quick reaction to the mornings data: "Investors can debate over whether or not the FOMC should be cutting rates later this year, but given the continued weaker trend of data and stress in the banking sector, any continuation of rate hikes in June would be completely out of touch." Here is a premarket snapshot from shortly before 0900 EDT:
(Terence Gabriel, Sinéad Carew)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
