Nasdaq, S&P 500 Futures Indicate Weak Opening For Wall Street: Benefit Of Lowering Recession Risk Comes With Sticky Inflation Threat, Says Economist

Index futures indicate U.S. markets are on track for a weak opening in continuation of Thursday's decline after hawkish comments from Federal Reserve officials and a higher than expected producers' price index hurt investor sentiments.

Investors and traders will be keenly watching out for Federal Open Market Committee member Michelle W. Bowman's remarks.

Cues From Thursday's Trading:

Major Wall Street indices closed over 1% lower on Thursday after producers' price index for January rose 0.7% against an estimate of 0.4% while hawkish comments from Federal Reserve officials also added to investor concerns.

Cleveland Fed President Loretta Mester stated the Fed Funds rate should be brought above 5% and kept there for some time while St. Louis Fed President James Bullard argued the central bank should have been more aggressive.

Analyst Color:

Allianz chief economic adviser and noted economist Mohamed El-Erian pointed out that steps taken to avoid recession comes with the threat of persistent price rises as is reflected by the economic data released over the last few weeks.

"From lower-than-expected jobless claims to higher-than-expected PPI, today’s US data releases are in line with the last few weeks of numbers suggesting that the #economy remains robust. The benefit of lowering/pushing out recession risk comes with the threat of sticky inflation," El-Erian tweeted.

Peter Schiff, chief economist and global strategist at Euro Pacific Capital believes inflation has not yet cooled down and that the American economy will either have to face recession or learn to live with the current trend of high prices.

"A lot more price hikes are coming as there’s still a lot of inflation left in the pipeline. Plus, rising budget and trade deficits, together with a weakening economy means the Fed will soon go from pretending to fight inflation to creating even more," Schiff tweeted.

Futures Today:

In pre-market trading, the SPDR S&P 500 ETF Trust SPY was down 0.64% at the time of writing while the Invesco QQQ Trust Series 1 QQQ fell 0.89%.

Upcoming Economic Data:

• Federal Open Market Committee member Michelle W. Bowman is scheduled to speak on Friday.
• Market participants will also be evaluating the Export Price Index and the Import Price Index that will have a bearing on the dollar which, over the last few days, has surged following strong economic data.

Stocks In Focus:

Moderna Inc MRNA: Shares of Moderna were down 5.93% in pre-market trading on Friday. The company released its interim Phase 3 safety and immunogenicity results for mRNA-1010.

Stem Inc STEM: Shares of Stem were trading 7.8% lower in pre-market session. The company posted a net loss of $35 million versus a net loss of $34 million in Q4 2021.

DraftKings Inc DKNG: Shares of the company rose 6.06% in pre-market trading. DraftKings reported a revenue of $855 million for the quarter-ended December, registering an increase of 81% compared to $473 million during the same period in 2021.

AMC NETWORKS INC AMCX, Deere & Company DE and BIT Mining Ltd BTCM are scheduled to report their quarterly earnings on Friday.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures were trading lower on Friday. West Texas Intermediate futures belonging to the March expiry were trading 2.5% lower at $76.55/bbl while Brent Crude April futures were trading lower by 2.33% at $83.16/bbl.

Yield on the 10-year U.S. Treasury notes was up by 0.055 bps at 3.898%.

Asia-Pacific markets closed lower. European stocks traded lower on Friday as investors weighed in on inflation data and Fed officials' comments.