Stock Futures Slip Amid Retail Worries

US stock futures edged down after a profit warning from Target cast a pall over the retail sector and Australia’s central bank spooked investors with a bigger-than-expected interest-rate increase.

Futures tied to the S&P 500 declined 0.9%, reversing direction after the broad-market index closed up 0.3% on Monday. Nasdaq-100 futures fell 1.1%, pointing to losses for technology stocks after the opening bell.

Stocks have swung in recent days, buffeted by shifts in views about the strength of the economy and the likely path for central banks and interest rates. A big concern is that central banks could act too aggressively as they combat inflation and trigger a slowdown in economic growth, or even a recession.

“We’re still in this constant push and pull about where inflation is going to be, where growth is going to be, and whether we’re going to be in a recession or not,” said Fahad Kamal, chief investment officer at Kleinwort. Hambros.

In premarket trading, Target plunged 8% after issuing a warning that its profit would decline because it needs to cancel orders or offer discounts to clear out unwanted goods, a potential sign of lower consumer spending. Shares of other big retailers followed, with Walmart declining 4% and Costco down 3%.

Data on the US trade gap in April is scheduled for release at 8:30 am ET, and economists are forecasting it will be narrow after reaching a record deficit the previous month. A key release this week is the consumer-price index on Friday, which will be closely watched for signals on whether inflation is weakening or not.

On Tuesday, the Reserve Bank of Australia lifted its key policy rate by 0.5 percentage point, more than expected.

“The Australian central bank’s move, it’s a reminder that central banks can surprise on the upside. What does this tell us about what the Fed will do, what the ECB will do ?, ”Mr. Kamal said. “More aggressive tightening directly equals a higher probability of a recession.”

The yield on the benchmark 10-year Treasury note climbed to 3.060%, the highest level in nearly a month, before easing to 3.018%, compared with 3.037% on Monday. Yields rise when prices fall.

“With yields at 3%, it shows that the market hasn’t decided if we’re going to have a recession or if we have one, how severe it’s going to be,” said Julien Lafargue, chief market strategist at Barclays Private Bank. . “That’s what you would want to own if you expect a recession.”

Traders worked on the floor of the New York Stock Exchange on Friday.


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Oil prices wavered. Global benchmark Brent crude ticked down 0.3% to trade at $ 119.13 a barrel.

Kohl’s jumped more than 11% premarket after The Wall Street Journal reported the department-store chain is in exclusive talks to be sold to retail holding company Franchise Group.

The deal may value the company at around $ 8 billion.

JM Smucker fell 3% after the company’s forward earnings guidance came in below analysts’ estimates.

Shares of BuzzFeed climbed nearly 5% premarket, recovering some ground after plunging 41% on Monday after a ban that prevented executives and major investors from selling shares was lifted.

Twitter declined 1.8%, extending Monday’s slide after Elon Musk threatened to end his acquisition of the social media platform, saying the company did not comply with requests for data about spam accounts.

Casey’s General Stores is slated to report after markets close.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.7%.

In Asia, major benchmarks were mixed. The Shanghai Composite Index added 0.2%, while Hong Kong’s Hang Seng Index declined 0.6%. Japan’s Nikkei 225 edged up 0.1%.

The Japanese yen has weakened 0.7%, reaching the lowest level against the dollar since April 2002. The yen has sold off this year as the Bank of Japan has remained committed to ultra-easy monetary policy, while many other central banks have begun lifting interest rates to fight rapid inflation.

Cryptocurrencies fell, with bitcoin tumbling 6% and dropping below $ 30,000. Ether declined 5%.

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around. Illustration: Jacob Reynolds

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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