Stock futures were lower on Friday morning as investors continued to dump year-end equities amid fears a recession could hit next year due to the Federal Reserve’s relentless rate hikes. .
Futures contracts linked to the Dow Jones Industrial Average lost 291 points, or 0.87%. S&P 500 futures lost 0.85% and Nasdaq-100 futures fell 0.45%.
Stocks that would suffer from a recession fell in premarket trading on Friday. GM and caterpillar were each off more than 1% in premarket trading.
Meanwhile, the shares of Olive Garden-parent Dard Restaurants rose slightly in pre-market after announcing better-than-expected earnings.
Friday’s selloff follows a tough day for the markets. The Dow Jones lost 764.13 points, or 2.25%, on Thursday for its worst daily performance since September. The S&P 500 and the Nasdaq Composite fell 2.49% and 3.23% respectively.
Thursday’s disappointing retail sales report suggested inflation is hitting consumers harder than expected. That worries investors about slowing consumer spending, a sign that the economy is weakening.
With these latest declines, the market heads into Friday with all indices poised for a second straight week of losses. The S&P 500 is down 1% for the week and 4.5% for December as hopes of a year-end rally crumble.
Trading could be particularly volatile on Friday with a large number of options set to expire. There are $2.6 trillion worth of index options due to expire, the highest amount “relative to the size of the stock market in almost two years,” according to Goldman Sachs.
Shares fell following the Federal Reserve interest rate hike 50 basis points Wednesday – the highest rate in 15 years. The central bank said it would continue raising rates through 2023 to 5.1%, a higher than expected figure.
“After mounting hopes of a Fed pivot, equity traders are experiencing indigestion from [Wednesday’s] FOMC statement, which reiterated Jerome Powell’s theme ‘higher for longer,’ said John Lynch, Chief Investment Officer of Comerica Wealth Management.
They’ll also be looking for clues about future Fed policy from speakers John Williams, Michelle Bowman and Mary Daly. Investors are trying to gauge the pace of future rate hikes and the central bank’s view of the economy.
There will also be data coming in the morning with the December purchasing managers’ indices in services and manufacturing.