U.S. stock futures posted a solid gain Thursday morning, with Nasdaq futures up nearly 1% the day after dipping into correction territory.
Futures tied to the Dow Jones Industrial Average gained 132 points, or 0.4%. S&P 500 futures added 0.53% and Nasdaq 100 futures traded about 0.9% higher. The Nasdaq, which is home to many of the market’s biggest tech names, dipped more than 10% on Wednesday from its most recent high, indicating a technical correction.
United Airlines shares fell about 1% in premarket trading after the company reported its quarterly results and warned that omicron has dented bookings and will delay its pandemic recovery.
In early earnings results, Dow component Travelers posted beats on the top and bottom lines while American Airlines also beat estimates but lowered guidance. Travelers rose 4% in premarket trading and American Airlines add about 1.2%.
Futures held their ground even as government bond yields again edged higher, part of a market repricing as the Federal Reserve gets set to tighten monetary policy.
The central bank meets next week, with markets indicating just a slight chance of action on interest rates. However, traders have fully priced in the first of what is expected to be four 0.25 percentage point hikes through 2022.
The two-year Treasury, which is most closely tied to Fed rate policy, most recently yielded about 1.04%, while the benchmark 10-year note was at 1.84%.
Ford Motor shares dropped 2.5% in premarket trading. The stock is coming off a meteoric surge in 2021 on hopes for its electric vehicle development, but Jefferies analysts said in a downgrade that the rally, which sent shares up 130% for the year, has gotten overdone.
Unemployment data on Thursday signaled the surge in omicron could be hurting the recovery.
Jobless claims for the week ended Jan. 15 totaled 286,000 for the week, their highest level since October. The read was well above the Dow Jones estimate of 225,000 and a substantial gain from the previous week’s 231,000.
In regular trading Wednesday, the Dow fell for the fourth day in a row, by 339 points, or 0.9%. The S&P 500 also fell 0.9%. The Nasdaq Composite closed down by 1.15% and now sits about 10% from its November record.
This year’s turbulence in tech stocks, set off by a spike in yields in the first week of January, continued Wednesday as the 10-year U.S. Treasury yield hit a high of 1.9%. It started the year at about 1.5%.
Brad McMillan, chief investment officer at Commonwealth Financial Network, acknowledged that the turbulence could last for some time but said investors shouldn’t panic about interest rate increases and that they’re normal as the economy returns to normal.
“The economy and markets can and do adjust to changes in interest rates,” McMillan said. “This environment is a normal part of the cycle and one we see on a regular basis. The current trend is perhaps a bit faster than we’ve been seeing, but it is a response to real economic factors–and, therefore, normal in context.”
Netflix is the big name to watch Thursday. The streaming giant is set to report its quarterly results after the closing bell.
