Futures slide on rising recession fears
2022.06.16 14:50
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. June 14, 2022. REUTERS/Brendan McDermid/File Photo
By Shreyashi Sanyal and Medha Singh
(Reuters) – U.S. stock index futures fell sharply on Thursday, with growth shares taking the biggest hit, after the Federal Reserve’s biggest rate increase since 1994 to tame rising prices fanned worries of a recession.
Mega-cap firms Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT) fell 3% each in premarket trading, with Nasdaq 100 futures plunging by a similar margin.
The Fed on Wednesday matched market expectations by hiking interest rates by 75 basis points. It also projected a slowing economy and rising unemployment in the coming months in the face of the worst inflation in 40 years.
“We view it as increasingly likely that a recession and higher unemployment will be necessary to tame inflation: with such a gloomy macro picture looming over the markets,” said Geir Lode, head of global equities at Federated Hermes (NYSE:FHI) Limited.
Following the Fed meeting, Wells Fargo (NYSE:WFC) said the odds of a recession now stand at more than 50%.
The Swiss National Bank raised its policy interest rate for the first time in 15 years in a surprise move on Thursday, while the Bank of England hiked borrowing costs by quarter of a percentage point.
The S&P 500 is down 20.5% year-to-date and is in a bear market as investors grapple with a sharp slowdown in growth. The Nasdaq Composite and the S&P 500 indexes were set to mark their 10th weekly decline in past 11 weeks.
At 6:40 a.m. ET, Dow e-minis were down 601 points, or 1.96%, S&P 500 e-minis were down 91.25 points, or 2.41%, and Nasdaq 100 e-minis were down 330.75 points, or 2.84%.
On the equities front, Morgan Stanley (NYSE:MS) led losses among major U.S. banks with a 2% slide.
Twitter Inc (NYSE:TWTR) firmed 2.6% ahead of Elon Musk’s meeting with its employees after a report said he was expected to reiterate his desire to own the social media company.
