The US stock market is expected to open lower on Friday, as investors struggle to cope with the Federal Reserve’s hawkish projections in the face of a cooling economy. Recent data showing easing inflation and rising unemployment claims have added to concerns.
The Federal Reserve has revised its interest rate cut projections from three to one this year, but markets still see a high chance of a cut in September. Pre-market declines in major tech companies like Microsoft, Amazon, Apple, Alphabet, and Meta are casting doubt on the sustainability of the rally amidst growing recession risks.
Navigating uncertainty is crucial for markets. Hopes for easing Fed policy and strong megacap stocks have fueled significant rallies, but sensitivity to economic shifts is evident. Futures are pointing to declines in major indexes, with small-cap Russell 2000 futures dropping 1.1%. However, semiconductor stocks like Broadcom and Nvidia continue to perform well.
On a global scale, there are mixed sentiments in fund movements. US value stock funds saw outflows while growth stock funds gained last week. Adobe shares surged after boosting its revenue forecast, while Sirius XM shares fell after being removed from the Nasdaq 100. Arm Holdings shares rose as it joined the index. Investors are eagerly awaiting comments from Federal Reserve officials and the University of Michigan’s Consumer Sentiment survey to gauge the economic direction.
