January 29, 2023

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Stock futures drop as investors look forward to economic data, and Federal Reserve speeches

Stock futures traded lower Thursday morning as investors awaited economic data and speeches from Federal Reserve leaders

And futures contracts related to the Dow Jones Industrial Average fell 130 points, or 0.39%. S&P 500 and Nasdaq 100 futures fell 0.29% and 0.13%, respectively.

These moves come after the shares fell in regular trading. The S&P 500 fell 1.56%, its worst day since Dec. 15. The Dow Jones lost more than 613 points, or 1.81%. The heavy Nasdaq Composite fell 1.24%, snapping seven straight days of gains. Bank stocks such as JPMorgan, Bank of America and Wells Fargo plunged, weighing on the broader market.

Disappointing retail sales and a weaker-than-expected PPI reading sparked recession fears, sending stocks lower. The 10-year US Treasury yield fell to its lowest level since September.

“The data continues to confirm sharp declines in inflation,” said Jamie Cox, managing partner of Harris Financial Group. “The question now is whether the economy can overcome the sharp increase in rates to tackle inflation.”

He added that while those who said the inflation was temporary may feel it has now been vindicated, the cost of getting there has yet to be realized.

“At a minimum, there will be stagnation in earnings, and that will keep stocks in check until that happens,” he said.

On Thursday, investors will weigh more economic data that could give more clues about how much the Federal Reserve will raise interest rates at its next meeting. In the morning, Initial Jobless Claims, Home Starts, and the Philadelphia Fed Manufacturing Survey will be released.

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Several central bank leaders, including Federal Reserve Vice Chairman Lyle Brainard, will also speak throughout the day about the path forward.

Investors will also be watching key quarterly reports to see if there is a slump in earnings. Netflix, Procter & Gamble and Truist Financial are among the companies that reported earnings on Thursday.