Stock futures ticked up Wednesday evening, paring some losses after a sell-off during the regular session sent the Nasdaq back into negative territory for the year to date. The S&P 500 closed at its lowest level since April 23.
Remarks earlier Wednesday from Federal Reserve Chair Jerome Powell spooked investors, as he raised the specter that “lasting damage” may be done to the U.S. economy in the wake of the coronavirus pandemic.
Powell also said he expected that unemployment would peak “over the course of the next month or so,” after the jobless rate surged to a record high of 14.7% in April, based on Bureau of Labor Statistics monthly data. He noted that those on the lower end of the income spectrum have borne the brunt of the declines, with the Fed finding nearly 40% of people in households making under $40,000 a year lost their jobs in March.
Economists at major firms have issued increasingly grim outlooks on the economic outlook in the near-term. Goldman Sachs economists said in a note Wednesday they anticipate the unemployment rate will peak at 25%, up from their previous estimate of 15%. In a similar downgraded forecast, Nomura economists said in another note Wednesday they now believe second-quarter U.S. gross domestic product “will be about 16.0% below its level in Q4 of last year, compared to a decline of 12.5% in our previous forecast.”
Others, however, have highlighted data showing areas of the economy that are moving in a direction of “less bad,” rather than worsening, as the outbreak progresses.
In a new report Wednesday, Bank of America said its daily credit and debit card data for May “showed meaningful improvement” in card spending relative to the doldrums of March, “driven by the lower income population.” Total card spending was running at a -10% pace over last year between May 3 and 7 – which, while still negative, was an improvement from the -36% year over year trend seen during the last 5 days of March, the analysts said.
The analysts attributed this to stimulus payments authorized by Congress and a phased reopening of the economy in some states, along with a greater number of individuals receiving benefits after filing jobless claims.
Meanwhile, corporate earnings season continued on Wednesday. Cisco (CSCO) shares rose in late trading after the company guided toward a shallower drop than expected in sales over last year for the current quarter.
Norwegian Cruise Lines Holdings (NCLH) and Applied Materials (AMAT) are set to released quarterly results before market open Thursday. On the economic data front, the Labor Department will release its weekly report on new jobless claims, which is expected to show another 2.5 million individuals filed for first-time unemployment benefits last week.
6:01 p.m. ET Wednesday: Stock futures rise
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:01 p.m. ET:
S&P 500 futures (ES=F): up 9.75 points, or 0.35%, to 2,822.75
Dow futures (YM=F): up 107 points, or 0.46%, to 23,273.00
Nasdaq futures (NQ=F): up 36.75 points, or 0.41%, to 9,029.00
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