S&P 500 and Dow futures opened slightly higher, while Nasdaq futures sank as the overnight session kicked off to track a decline in heavily weighted component Amazon.
The three major indexes had closed out Thursday’s regular session higher as investors contemplated more corporate earnings results and a second-quarter U.S. GDP report that missed lofty economists’ expectations. But traders appeared to take the latest economic data as a sign bolstering the Federal Reserve’s case to keep current accommodative monetary policies in place during the recovery. Second-quarter GDP came in at 6.5%, or below consensus estimates for 8.4% annualized growth.
“The economic data today was not bad. It was in between that not too good, not too hot in order to bring the Fed to the table,” Meghan Horneman, director of portfolio strategy at Verdence Capital Advisors, told Yahoo Finance. “But when you look at it, with over 6% economic growth, that’s fantastic. That’s a very good number.”
Many economists are expecting to see a slowdown in the pace of expansion in the economy in the second half of this year, with the peak effects of crisis-era monetary and fiscal policies and an early surge of consumer demand starting to wane. For corporate earnings, however, the second-half headwinds could be more pronounced, with the impacts of factors like inflation and supply chain issues still at play.
“There’s just going to be a little bit of uncertainty from all of the earnings reports because in the second half of this year … the companies will still be fighting some of those after-effects from the pandemic, like inflation, like supply chain disruptions,” Horneman said. “That’s going to continue.”
Some major companies have pointed to some of these concerns for the second half of the year. Amazon (AMZN) became the latest mega-cap technology company to post disappointing guidance, with a pandemic-fueled surge in e-commerce set to fade and drag on revenue growth. The company said it sees current-quarter net sales coming in at as much as $112 billion, missing estimates for $118.7 billion. Shares fell more than 7% in late trading.
The forecast echoed comments around an impending deceleration in sales growth at Facebook (FB), which appeared to vindicate many traders’ concerns that the pandemic-era winners of last year would ultimately be unable to sustain such heightened growth rates as the recovery matured.
Still, however, the vast majority of companies have at least posted second-quarter earnings results that topped estimates. These results, in tandem with ongoing support from monetary policymakers, have helped fuel the market to record levels. The S&P 500 hit a record intraday high on Thursday and ended just short of its record closing high.
The blue-chip index is also on track to post a strong monthly gain, with its July advance pacing toward 2.8%. Over this period, the utilities, healthcare and real estate sectors have been the outperformers, followed by information technology and communication services. The S&P 500 has risen 17.7% so far for the year-to-date.
6:00 p.m. ET Thursday: Nasdaq futures dip as Amazon weighs
Here were the main moves in markets as the overnight session kicked off:
S&P 500 futures (ES=F): -14 points (-0.32%) at 4,397.75
Dow futures (YM=F): +18 points (+0.05%) to 34,992.00
Nasdaq futures (NQ=F): -118.75 points (-0.79%) to 14,919.00
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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