US stock futures whipsaw as traders digest a mix of Fed-induced anxiety, strong GDP growth, and solid Apple earnings
- US stocks are set for another volatile session Friday as traders weigh the US growth at 40-year highs and a hawkish Fed.
- "The buy-the-dip crowd has a new motto: 'sell the rally,'" one analyst said.
- Apple stock rose 5% after delivering its highest revenue in history.
US stocks looked set to fluctuate in another volatile session Friday as markets continued to digest the aftermath of Federal Reserve Chair Jerome Powell's hawkish comments this week.
Futures on the Dow Jones and the S&P 500 swung between gains and losses as of 4:30 a.m. ET, suggesting a mixed open to trading later in the day, while those on the Nasdaq 100 rose 0.6%, reflecting the snap-back in tech stocks, following stellar quarterly results from iPhone maker Apple the day before.
The combination of strong economic data, a mixed bag of corporate earnings, and the Fed embarking on back-to-back hikes to combat inflation are weighing on markets.
Data from the Commerce Department Thursday showed US gross domestic product grew 5.7% through 2021, the fastest expansion in nearly four decades.
Apple rose 5% in premarket trade after posting record revenue of about $124 billion that blew past Wall Street estimates. The company recorded its highest revenue ever in the fourth quarter.
"Clearly, Apple has found a way to operate efficiently despite the chaos in global supply chains," Adam Vettese, analyst at investment network eToro, said. "So, unless something changes, it looks likely that another record quarter could be on the cards the next time the firm reports."
Meanwhile, retail trading platform Robinhood tumbled 12% after missing estimates and warning of a revenue slowdown in the first quarter.
All three major US indices ended lower in a volatile session on Thursday, rocked by the prospect of more interest rate hikes than many had previously expected this year.
"Market volatility is not going away anytime soon as the buy the dip crowd has a new motto: 'sell the rally,'" Edward Moya, senior market analyst at OANDA, said. But the stock market rally didn't last, as corporates reminded investors of persistent supply chain troubles and gloomy profit forecasts, he added.
With rate hikes and quantitative tightening being the major themes for markets this month, many traders are still processing opportunities in this period, analysts said.
" Those who have become so addicted to loose monetary policy in recent months will be looking ahead with trepidation," Joe Tuckey, an analyst for foreign-exchange firm Argentex, said.
The Fed funds futures market — which estimates the probability of rate movements — is now pricing in two full hikes over the next two meetings in March and May, and nearly five rate hikes this year.
Elsewhere in Europe, markets were weighed down by the recent hawkish turn of the Fed, which is likely to draw investment flows into dollar-based assets, as investors seek out higher returns.
London's FTSE 100 fell 0.9%. The pan-European Euro Stoxx 600 fell 0.8% and Frankfurt's DAX lost 1.4%.
Asian markets recovered some of their heavy losses from Thursday, supported more by optimism over the strength in the US economy, although those gains were tempered by the threat of outflows from emerging markets, leaving major indices mixed.
Tokyo's Nikkei rose 2%. The Shanghai Composite fell 0.9% and Hong Kong's Hang Seng fell 1%.
Bitcoin was last trading flat around $36,830, and is down 13% in the last two weeks, according to CoinGecko data. A Barrons report on Thursday said the US is preparing to regulate bitcoin and other crypto-assets over national security.