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Fears that aggressive tightening by major central banks will
cause a sharp economic downturn have roiled financial markets
this month, pushing the benchmark S&P 500 to confirm a bear
market or a 20% fall from its recent peak.
Data on Thursday showed U.S. business activity slowed
considerably in June, driving investors to scale back bets on
where interest rates may peak and bring forward their views on
the timing of rate cuts.
Money markets see U.S. interest rates peaking at around 3.4% by
next March, far below the just above 4% priced for June 2023
before last Wednesday's Fed meeting. FEDWATCH
Copper prices on Friday were set for their biggest weekly fall
in a year and other industrial metals also tumbled, while crude
oil was headed for a second straight weekly decline.
The Fed's commitment to reining in 40-year-high inflation is
"unconditional," Chair Jerome Powell told lawmakers on Thursday,
a day after saying it was not trying to provoke a recession but
that was "certainly a possibility."
The main stock indexes looked set to notch their first weekly
gain in four, with healthcare, real estate and utilities - among
sectors considered as safer bets during times of economic
uncertainty - outperforming so far in the week.
Megacap stocks such as Apple Inc and Tesla rose about 1% in
premarket trading. Rising interest rates have hurt shares of the
mega-cap growth companies as their valuations rely more heavily
on future earnings.
At 06:58 a.m. ET, Dow e-minis were up 187 points, or 0.61%, S&P
500 e-minis were up 26.75 points, or 0.7%, and Nasdaq 100
e-minis were up 104.5 points, or 0.89%.
FedEx Corp rose 3.4% after the parcel delivery company issued a
stronger-than-expected full-year profit forecast despite
softening global demand for shipping.
Bank stocks were mixed after the Federal Reserve's annual
"stress test" exercise showed that the lenders have enough
capital to weather a severe economic downturn.
Citigroup Inc slipped 0.3%, while Bank of America Corp rose 0.3%
and Morgan Stanley 0.7%.
Zendesk Inc soared 55.4% after reports said the software company
was close to a deal with a group of buyout firms that includes
Hellman & Friedman LLC and Permira.
The University of Michigan's survey on U.S. consumer sentiment
in June and new home sales data will be published later in the
day.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj
Kalluvila)
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