U.S. stock futures drifted lower at the start of the second half of the year, with investors bracing for more volatility amid heightened inflation and expected interest-rate increases.
Futures for the S&P 500 edged down 0.2% Friday. The broad index closed out Thursday lower, heaping on additional losses to mark the worst first half of the year since 1970. Contracts for the tech-focused Nasdaq-100 retreated 0.3% and futures for the Dow Jones Industrial Average shed 0.1%.
VIX slid 0.1% while VIXmain rose over 1%.
Gold slid 0.85% and reached $1791.9.
In premarket trading, shares of Kohl’s fell 12% after CNBC reported that the retailer ended talks to be acquired by Franchise Group. Memory-chip maker Micron Technology shares fell 3.5% premarket after the company issued a subdued revenue outlook, spooking investors even as it reported a strong rise in earnings for its latest quarter.
Investors remain focused on persistent inflation that has forced central banks to reverse years of easy-money policies and accelerate interest-rate increases. That change in position has bolstered fears of slowing growth that could lead to a recession. Central bank officials globally have signaled that they are more concerned about taming inflation than an economic slowdown.
The Institute for Supply Management’s report on U.S. factories is expected to show that manufacturing activity decelerated in June, when figures are released at 10 a.m. ET. Data released this week showed U.S.household spending slowed in May.
“We can see the foundations are being set for a recession,” said Seema Shah, chief strategist at Principal Global Investors. She expects to see a recession at the start of next year if the labor market, which she said is still strong, weakens.
The war in Ukraine and uncertainty over the pace of future oil production make it difficult to assess the path for inflation and the prospect of recession, she said. Elevated energy prices have been a key component of higher inflation.
Brent crude, the international benchmark for oil prices, rose 1.6% to $110.78 a barrel.
In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 3.002% from 2.973% Thursday. Yields and prices move inversely.
Bitcoin, the world’s largest cryptocurrency by market value, continued to trade below $20,000 amid concerns about firms within the digital assets ecosystem. Its value had surpassed $60,000 at its peak last November.
The WSJ Dollar Index, which measures the performance of the U.S. currency against 16 others, added 0.3%. The dollar in recent months has appreciated significantly against other currencies as weaker global economic growth drives investors toward havens.
Overseas, the pan-continental Stoxx Europe 600 was flat. In Asia, major indexes closed with losses. Japan’s Nikkei 225 declined 1.7%, while South Korea’s Kospi fell 1.2%. China’s Shanghai Composite edged 0.3% lower. Hong Kong’s Hang Seng was closed for a holiday.
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