Wall Street Braces For Another Red Day Ahead Of More Inflation Data While Bitcoin Holds Above $70K: Analyst Sees Any Pullback As 'Phenomenal Buying Opportunity'

Zinger Key Points
  • The Dow Industrials is now at a nearly two-month low and rate-sensitive small-caps also fell sharply.
  • Analyst sees upcoming earnings as the one big catalyst that could drive stocks higher.

The negative mood on Wall Street may persist as investors await the release of another inflation report, which will have significant implications for the near-term trend in consumer prices. Wholesale price inflation typically flows down the supply chain and manifests as higher retail prices in the coming months.

Major U.S. index futures are pointing towards a lower opening on Thursday. Traders may also be keeping an eye on a key central bank decision from Europe, the weekly U.S. jobless claims data, and a series of Fed speeches scheduled for later today.

Futures Performance On Thursday ( as of 6:50 a.m. EDT)

FuturesPerformance (+/-)
Nasdaq 100-0.12%
S&P 500-0.24%

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY fell 0.19% to $513.15, and the Invesco QQQ ETF QQQ slipped 0.13% to $437.81 according to Benzinga Pro data.

Cues From Previous Session:

Soaring inflation data and the subsequent Federal Reserve meeting minutes rattled investors on Wednesday. The minutes revealed a lack of strong consensus among Fed officials regarding inflation’s trajectory, fueling concerns that it may not be on a sustained downward path. This uncertainty led to a significant decline in major indexes at the open. The markets then displayed limited movement throughout the trading day, remaining at these depressed levels.

The Dow Jones Industrial Average closed at its lowest point in nearly two months. Sectors particularly sensitive to interest rate fluctuations, such as real estate, financials, healthcare, utilities, consumer discretionary goods, and materials, experienced heavy selling pressure.

IndexPerformance (+/-)Value
Nasdaq Composite-0.84%16,170.36
S&P 500 Index-0.95%5,160.64
Dow Industrials-1.09%38,461.51
Russell 2000-2.52%2,028.39

Insights From Analysts:

Fund manager Louis Navellier was undeterred by Wednesday’s market slide and saw it as a “phenomenal buying opportunity.”

“I think in a couple of weeks you’ll realize today [Wednesday] was probably the best buying opportunity you’re going to have,” he said. Navellier premised his view on his expectations for a strong earnings season.

Morgan Stanley’s Lisa Shalett, meanwhile, sounded out a note of caution about a strong economy. Hot economic growth may fuel inflationary pressure and squeeze corporate profits, she said. The analyst also sees a hotter-than-expected economy to prompt the Fed to rethink its rate-cut itinerary.

“If the central bank's rate-cutting cycle is delayed or if rates come down less than anticipated, the resulting higher-for-longer rate environment could pose risks for key sectors of the economy,” she said. “It would likely weigh on spending by middle- and lower-income consumers, for instance, and put further pressure on already-vulnerable sectors like commercial real estate and regional banks.”

Upcoming Economic Data:

The Labor Department is scheduled to release its producer price inflation report for March at 8:30 a.m. EDT. The consensus estimates for the key numbers versus the previous month’s comparisons are as follows:

Consensus (March)Actual (Feb.)
Producer Prices (M-o-M Change)0.3%0.6%
Core Producer Prices (M-o-M Change)0.2%0.4%
Producer Prices (Y-o-Y Change)2.2%1.6%
Core Producer Prices (Y-o-Y Change)2.3%2.8%

The Labor Department will also release its jobless claims data for the recent reporting week at 8:30 a.m. EDT. The number of individuals claiming unemployment benefits may have come in at 221,000 in the week ended April 6, down from 217,000 in the previous week.

The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT and 30-year bonds at 1 p.m. EDT.

Fed officials scheduled to speak include:

  • Fed Governor Michelle Bowman: 8:45 a.m. EDT
  • Boston Fed President Susan Collins: noon EDT
  • Chicago Fed President Austan Goolsbee: 12:45 p.m. EDT
  • Atlanta Fed President Raphael Bostic: 1:30 p.m. EDT

See Also: How To Trade Futures

Stocks In Focus:

  • Robinhood Markets, Inc. HOOD fell over 2% in premarket on an analyst downgrade.
  • Alpine Immune Sciences, Inc. ALPN jumped over 36% after agreeing to be acquired by Vertex Pharmaceuticals Inc VRTX.
  • CarMax, Inc. KMX, Constellation Brands, Inc. STZ, Lovesac Company LOVE and Fastenal Company FAST are among the companies reporting ahead of the market open

Commodities, Bonds, and Global Equity Markets:

Crude oil futures fell back to under the $86-a-barrel mark, giving back some of the 1%+ gains they made on Wednesday. Gold futures traded modestly higher after pulling back in the previous session on the dollar’s strength. The yield on the benchmark 10-year Treasury held below around 4.55% levels.

Bitcoin BTC/USD was firm, as it held above the $70,000 level.

Most Asian markets slid on Thursday as they reacted to the hotter-than-expected U.S. inflation data and its implication for the Fed funds rate. The Chinese market, however, ended modestly higher as data showing weak consumer price inflation and producer price deflation in the country raised hopes of governmental support.

European stocks traded water ahead of the European Central Bank’s rate decision due at 8:15 a.m. EDT. The consensus view is that the central bank would stand pat on rates.

Read Next: Fed Minutes Reveal Growing Unease Over Inflation Path: Not ‘Merely Statistical Aberrations’

Image created via photos on Shutterstock

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