Nasdaq Futures Down 100 Pts; Tech Stocks Under Pressure After Fed Move

By Peter Nurse

Investing.com - U.S. stocks are seen opening lower Friday, with tech stocks set to underperform after the Federal Reserve pointed to a series of interest rate hikes next year in an attempt to contain inflationary pressures.

At 7 AM ET (1200 GMT), the Dow Futures contract was down 25 points, or 0.1%, S&P 500 Futures traded 12 points, or 0.3%, lower and Nasdaq 100 Futures dropped 100 points, or 0.6%.

The major averages closed lower Thursday, with the tech-heavy Nasdaq Composite suffering the most, dropping 2.5%, its worst day since September as investors appeared to rotate from high-growth tech names to consumer staples. The Dow Jones Industrial Average dropped just 30 points, or 0.1%, and the S&P 500 fell 0.9%.

“The Fed looks to have pivoted to a significantly more hawkish stance,” said analysts at ABN Amro, in a note. “If anything, the recent continued upside surprises in inflation and in the labour market suggest the risk at this stage is of an even earlier rates lift-off than our current June projection.”

Investors initially bought into the confidence that the Fed showed that the U.S. economy would be able to withstand tighter monetary policy even as a new variant of coronavirus threatens to upend travel and business.

However, the rapid growth of cases of the Omicron Covid variant has stoked worries that the economic recovery could suddenly reverse, especially after President Joe Biden warned of a “winter of severe illness and death” for citizens who have not been vaccinated.

Turning to the corporate sector, FedEx (NYSE: FDX ) will be in the spotlight after the shipping company reinstated its original fiscal 2022 forecast late Thursday, even amid persistent labor challenges during its peak holiday season.

Rivian (NASDAQ: RIVN ) will also be in focus after the electric vehicle manufacturer reported a hefty net loss in its first quarterly results as a public company, and also said its expected production would fall short of its 2021 target.

Staying in the auto sector, General Motors (NYSE: GM ) said Thursday that Dan Ammann, the chief executive of its self-driving car subsidiary Cruise, is leaving with immediate effect.

Darden Restaurants (NYSE: DRI ) and Winnebago (NYSE: WGO ) are scheduled to report quarterly earnings results before the bell.

Oil prices weakened Friday, on course for a negative week, as surging cases of the Omicron Covid-19 variant raised concerns new restrictions may hit demand for crude.

Traders will look to the release of the Baker Hughes oil rig count and the CFTC positioning data later in the session to round the week off.

By 7 AM ET, U.S. crude futures traded 1.8% lower at $71.11 a barrel, while the Brent contract fell 1.8% to $73.70. Brent is headed for a 1.9% loss this week, while the U.S. contract is poised to finish the week down 0.9%.

Additionally, gold futures rose 0.7% to $1,810.35/oz, while EUR/USD traded 0.1% lower at 1.1317.