Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, the United States, March 29, 2022.
Brendan McDermid | Reuters
Stock futures rose early Thursday as investors assessed a new quarter of trading and a troubled indicator of a recession in the bond market.
Investors were also awaiting the official jobs report for March, which the Labor Department will release at 8:30 a.m. ET on Friday.
Dow futures gained 65 points, or 0.2%. S&P 500 futures rose 0.2% and Nasdaq 100 futures rose 0.2% to open the first trading session of the second quarter.
The Dow Jones Industrial Average collapsed Thursday to end the first negative quarter for stocks in two years, with losses accelerating in the last hour of trading. The Dow fell 550.46 points, or 1.56%, to 34,678.35. The S&P 500 fell 1.57% to 4,530.41 and the Nasdaq Composite fell 1.54% to 14,220.52.
All three major moving averages posted their worst quarters since March 2020. The Dow and S&P 500 fell 4.6% and 4.9%, respectively, over the period, and the Nasdaq fell more than 9%. Equities staged a comeback in March towards the end of the quarter, but after the first half of the year was marked by sharp falls due to rising interest rates and inflation.
For the time being, the stocks shook off a recession signal from the bond market that was triggered after the closing bell on Thursday. 2-year and 10-year Treasury yields have reversed for the first time since 2019. For some investors, this is a signal that the economy is headed for a potential recession, although the inverted yield curve doesn’t accurately predict when it will happen and its history shows it could last more than a year or more.
“I think everyone needs to acknowledge the fact that we’re obviously going into a slower economic environment,” Shannon Saccocia, chief investment officer at Boston Private Wealth, told CNBC’s Closing Bell.
“You have to get earnings growth from somewhere, and if it’s not going to be a secular tailwind, like fiscal spending and monetary easing, then you have to look elsewhere for growth. I think we’re going to see some real nuance in trading over the next three months or so as people look for that growth against this tougher economic backdrop.”
A strong Friday jobs report could give the Fed more confidence to maintain its aggressive rate hike plan this year in a bid to dampen inflation without fear of slowing the economy too much. Economists expect about 490,000 jobs were added in March, according to the Dow Jones consensus estimate, after 678,000 new jobs were added in February. According to Dow Jones, the unemployment rate is expected to fall from 3.8% to 3.7%.
GameStop is up more than 10% in extended trading after the video game retailer and the meme stock announced their intentions for a stock split.
Energy prices fell on Thursday after the White House announced it would release an unprecedented amount of oil from the Strategic Petroleum Reserve. Up to 1 million barrels of oil per day will be released over the next six months.
Other key indicators to watch out for are the ISM manufacturing index and the construction spending report, both of which will be released Friday at 10:00 am ET.