Dow futures decline after two consecutive days of profit on Wall Street

June 9, 2022: -On Wednesday, the stock futures decreased after two consecutive days of profit on Wall Street.

Futures on the Dow Jones Industrial Average decreased 142 points or 0.4%. S&P 500 futures came down to 0.4%, and Nasdaq 100 futures lost 0.3%.

The moves come as investors weigh updates from significant companies and show that economic growth may be slowing.

Credit Suisse issued a profit warning for the second quarter, which cites closer monetary policy and the war in Ukraine. On Tuesday, Target, which gave its warning, was downgraded to neutral from buy by Bank of America.

Although, the Atlanta Federal Reserve’s GDPNow tracker showed a growth rate of almost 0.9% for the second quarter, down from 1.3% in the previous week.

As the Federal Reserve keeps tightening monetary conditions, the concerns about economic growth and corporate earnings could significantly impact stocks, Allianz chief financial advisor Mohamed El-Erian said.

“The markets take this news much better than they would have otherwise, but if I were completely invested right now, I’d take some chips off the table. I would wait for my value to be created,” El-Erian said.

All eyes will be on the consumer price index reading for May. Some believe the print will be crucial for the path of Fed policy and whether the central bank will keep increasing rates in 50-basis-point increments.

On the earnings front, shares of Ollie’s Bargain Outlet Holdings decreased 6% in premarket trading after the discount retailer missed estimates for its initial quarter. However, Campbell Soup moved higher after a stronger than expected quarterly report.

Action in the bond market may have hurt investor sentiment, as the 10-year Treasury yield increased more than 3.03%.

On Tuesday, investors shrugged off a few signs of an economic slowdown ahead of a critical inflation reading. The S&P 500 gained nearly 1%, increasing for a second straight day. Tuesday, the 30-stock Dow advanced more than 260 points, while the tech-heavy Nasdaq Composite increased 0.9%.

The stock market has had a roller-coaster year as the aggressive rate of the Fed’s increase stoked recession fears. The S&P 500 is off almost 14% from its all-time high reached in January. The equity benchmark briefly declined into bear market territory on an intraday basis in the previous month.

“The question is if this slower implied speed of tightening is attributable to the belief that the Fed is going to meet its policy goals or as the economy will be tipping into a recession,” said Gargi Chaudhuri, head of iShares investment strategy at BlackRock.