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Market Snapshot: Wall Street on course to continue its rotten run, with ISM manufacturing data in focus

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U.S. stock futures edged lower on Friday as worries about slowing economic growth continued to suppress investors’ risk appetite, potentially extending a rotten run that saw Wall Street record its worst first half of a year since 1970.

Data ahead includes the Institute for Supply Management’s June survey.

How are stock-index futures trading?
  • S&P 500 futures
    ES00
    dipped 0.2% to 3,782.50
  • Dow Jones Industrial Average futures
    YM00
    fell 0.2% to 30,719
  • Nasdaq 100 futures
    NQ00
    slid 0.2% to 11,503.75

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DJIA
fell 253.88 points, or 0.8%, to 30,775.43. The S&P 500
SPX
lost 33.45 points, or 0.9%, to 3,785.38. The Nasdaq Composite
COMP
shed 149.16 points, or 1.3%, to 11,028.74.

The CBOE Volatility index
VIX,
a gauge of expected equity market volatility, closed Thursday’s session at 28.71, well above its long term average around 20. On Friday, the VIX added another 2% to 29.28.

What’s driving markets?

New half, same miserable mood. The S&P 500 has already lost 20.6% so far in 2022, crushed by fears that central banks’ moves to raise interest rates in response to lingering high inflation may trigger contraction across many developed economies.

And investors seemed slightly less eager to start the third quarter with bargain hunting ahead of a long weekend for Wall Street. U.S. markets will be closed on Monday for the Independence Day holiday.

Data out of the U.S on Friday includes the ISM manufacturing index and the construction spending report, both due at 10 a.m. Eastern.

“The main reason for these broad-based declines is the fact that recession risks have ramped up significantly over Q2,” said Deutsche Bank in a note to clients.

Central banks misjudged inflation and find themselves playing catch up, even if sharply tightening policy may cause an economic downturn, according to Richard Hunter, head of markets at Interactive Investor.

Read: Eurozone inflation rose to record high of 8.6% in June

“The imminent quarterly reporting season will heap pressure on companies to reverse the trend of declining sentiment. This will be no mean feat, given the pressure on margins and an uncertain outlook, and as seen in the previous quarter, earnings misses will be severely punished,” he said, in a note to clients.

On that note, reaction to disappointing revenue guidance late on Thursday from Micron Technology Inc.
MU
may offer some hope to equity bulls. Shares of the memory-chip group fell 3.4% in pre-market trading, after the company’s forecast-beating expectations came with a poor outlook.

But as the memory-chip group’s stock had already lost 40% in 2022, meager response to the latest forecast may suggest much bad news is already priced into the market.

Opinion: The chip boom likely over, as Micron says it’s in a ‘downturn’

Silver prices
SI00
fell below $20 an ounce for the first time in nearly two years on concerns demand from high tech manufacturers will abate amid a broader economic slowdown. Silver was last down 3% to $19,73 an ounce. Gold prices
GC00
fell 0.7% to $1,794.80 an ounce.

How are other assets trading?
  • Asian equities struggled. Japan’s Nikkei 225 Index
    JP:NIK
    closed down 1.7%. China’s Shanghai Composite Index
    CN:SHCOMP
    fell 0.3%. Data showed manufacturing activity among Chinese small and medium size companies expanded in June at its fastest pace in 13 months.
  • European bourses recovered early losses, leaving the Stoxx Europe 600
    XX:SXXP
    up 0.1%.
  • Bitcoin
    BTCUSD
    was trading at $19,461, in a choppy session that has seen the cryptocurrency range swing as high as $20,860.

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