US Stock Index Futures Under Early Pressure Following Thursday’s Rout

U.S. stock futures are inching lower early Friday after posting a steep selloff the previous session amid concerns over a slowdown in economic growth. All three major averages are on track to close lower for the week.

The economic reports on Friday come in on the light side with Final Wholesale Inventories due to be released at 14:00 GMT and a tentatively scheduled Federal Reserve Policy Report. This report will provide a summary of discussions of the conduct of monetary policy and economic developments and prospects for the future. It is submitted, along with testimony from the Federal Reserve Chair, to the Senate Committee on Banking, Housing, and Urban Affairs and to the House Committee on Financial Services.

At 04:30 GMT, September E-mini S&P 500 Index futures are trading 4302.00, down 11.00 or -0.26%. September E-mini Dow Jones Industrial Average futures are at 34231, down 63 or -0.18% and September E-mini NASDAQ-100 Index futures are trading at 14669.00, down 43.25 or -0.29%.

In other overnight news, China’s factory gate inflation eased in June after a government crackdown on runaway commodity prices, but the annual rate stayed uncomfortably high and underlined growing strains on the economy as Beijing tries to bolster a post-coronavirus revival, Reuters reported.

Friday’s data from the National Bureau of Statistics (NBS) showed the producer price index (PPI) increased 8.8% from a year earlier, compared with a 9.0% rise in May, and in line with analysts’ expectations in a Reuters poll.

The NBS also released consumer price inflation data, which showed a slowing last month and limited pass-through from high factory gate prices.

Thursday Recap

Wall Street fell sharply on Thursday from the previous session’s record closing high, on a broad sell-off fueled by uncertainties surrounding the pace of the U.S. economic recovery.

As the bond market rallied on a flight to safety, all three major U.S. stock indexes turned sharply lower early but pared losses by late afternoon. The S&P 500 and the NASDAQ retreated from a series of all-time closing highs.

Spreading the Blame…

Sensing cracks in the U.S. economic recovery, traders covered short positions in the bond market. The yield of the benchmark 10-year U.S. Treasury note fell for the eighth consecutive session.

In Tokyo, a fresh outbreak of the Delta COVID-19 variant prompted organizers of the Olympics to ban spectators from the event, reviving fears about global health crisis.

Additionally, the number of U.S. workers filing first-time applications for unemployment benefits unexpectedly ticked up to 373,000 last week, a sign that the U.S. labor market recovery remains choppy.

Furthermore, Beijing’s ongoing clampdown on U.S.-listed Chinese companies fed into the risk-averse mood.

Finally, on Wednesday, the U.S. Federal Reserve released minutes from its latest monetary policy meeting, which showed the central bank does not yet believe the economy has fully recovered, yet a debate on tightening policy has begun in earnest.