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US stock futures saw their leading indexes advance even as the S&P 500 sits just 2% off impending bear market territory.
Stock futures rose higher early Friday as the S&P 500 faces a likely slide into the bear market. The Dow Jones Industrial Average futures advanced 255 points, or 0.81%, while Nasdaq 100 futures traded 1.4% higher. Furthermore, the S&P 500 futures rose 0.94%.
Meanwhile, European stocks also climbed higher Friday morning as global markets look to rebound from a trying week. This sees investors pay close attention to new developments surrounding inflation and accompanying interest rates.
On Wednesday, both the S&P 500 and DJIA declined 0.1% and 0.3%, respectively, despite bouncing off their intraday lows. As it stands, the S&P is down by more than 18% from its record high. The implication is that the major index will be in official bear market territory should that loss deepen to 20%. As for the Nasdaq Composite, the tech-heavy index managed a gain of less than 0.1% on Wednesday but is already in a bear market. Currently, the index is down by more than 29% from its record high, while DJIA is presently on a six-session losing streak.
Stock Futures Development Comes Amid General Decline in US Tech Stocks
The stock market has been declining for months now, beginning with unprofitable high-growth tech stocks towards the end of 2021. Eventually, this decline also extended to companies with robust cash flow stocks as we have seen in recent weeks. On Thursday, consumer electronics giant Apple (NASDAQ: AAPL) slumped into a bear market. This made the California-based company the last Big Tech member affected by the pervasive sell-off. In addition, Apple’s decline saw it cede its position as the world’s most valuable company to Saudi Aramco.
Rising inflation in the US is one of the primary reasons for the sweeping stock decline in recent months. Citi strategist Dirk Willer made his observations known on this trend in a recent note to clients, which read:
“Large deviations from long-term price trends have been used for bubble identification. We find that US equities have been in a bubble based on this metric, and are now exiting it.”
Furthermore, on Thursday, Federal Reserve Chairman Jerome Powell suggested that raising interest rates is a price to pay for containing inflation. According to Powell, he can not guarantee a “soft landing” that tackles inflation without risking a recession.
In Europe, the pan-European Stoxx 600 gained 1% in the early trading session. At the moment, the major European stock index is now down 13% year-to-date. Furthermore, banks advanced 1.9% to lead gains as all sectors, and leading bourses were in positive territory.
In the Asia-Pacific, Japan’s Nikkei 225 leads Friday’s rebound with a 2.6% climb. In addition to all these, investors are also closely monitoring the war in Ukraine as the disruption and eventual direction of the war may push European stocks in either direction.