Stock futures tumble after inflation prints in line

US stocks fell on Thursday as investors analyzed the latest batch of economic data and braced for more Fedspeak and the start of earnings season from tech giants.

The S&P 500 (^GSPC) is down nearly 1%, while the Dow Jones Industrial Average (^DJI) is down 0.8% during midday. The technology-heavy Nasdaq Composite (^IXIC) fell 1.1%.

Bond prices rose. The yield on the 10-year US Treasury fell to 3.368% from 3.374% on Wednesday. The dollar index fell Thursday morning.

Stocks fell on Wednesday after new government data showed a slowdown in consumer spending activity, while a reading of wholesale price inflation showed signs of easing price pressures in the economy. The S&P 500 had its worst day on Wednesday since mid-December, failing to hold its 200-day moving average, according to JP Morgan’s US Market Intelligence team.

Wall Street got through another round of data and Fedspeak on Thursday. Federal Reserve Vice Chairman Lyle Brainard said Thursday that the central bank should continue the course of making monetary policy more restrictive to “make sure that inflation returns to 2 percent on a sustainable basis.”

Later on Thursday, Bank of New York President John Williams and Bank of Boston President Susan Collins are expected to speak at separate events ahead of the Federal Reserve’s next monetary policy meeting, which begins on January 31.

On Wednesday, other Fed officials called for more rate hikes. St. Louis Federal Reserve Chairman James Bullard said policymakers should move interest rates above 5% “as quickly as possible” before pausing the current rising cycle.

On the economic data front, US new home construction continued to decline in December, marking the fourth consecutive monthly decline, capping a disappointing year for the industry.

Residential unit starts fell 1.4% last month to 1,382 million at an annual rate, according to government data released Thursday. Construction of single-family homes jumped to an average of 909,000 annually. Economists polled by Bloomberg called for a 1.36 million-paced increase in total housing projects in December.

Building orders, the proxy for future construction, fell 1.6% to 1.33 million units annually. Permits to build single-family homes decreased by 6.5%.

Initial jobless claims fell to 190,000 compared to 205,000 in the previous week. Claims were expected to rise to 214,000, according to Bloomberg estimates.

Meanwhile, the Philadelphia Fed Manufacturing Index improved slightly in January to -8.9 from -13.8 in December. This reading came out better than expected -10.3.

Investors are beginning to usher in a potential earnings season likely in the fourth quarter, as analysts lowered their forecasts for earnings growth. According to data from FactSet Research – the consensus for an earnings drop is 3.9%, which would mark the first annual earnings drop reported by the index since 2020 if materialized.

DataTrek’s Nicholas Colas notes that the strength of corporate earnings remains a question mark. Fourth-quarter earnings should provide some insight, but comments from management on this year’s fundamentals will be even more important. The problem, in Colas’ view, is that no CEO has an incentive to be optimistic right now.

Netflix (NFLX) is set to take center stage as it reports earnings on Thursday after the market closes, kicking off a two-week period during which most of the big tech companies in the market will report their quarterly results.

The streaming giant’s results will be closely watched, as this quarterly update gives a closer look at the company’s subscriber momentum in the last quarter of last year and any color on the ad-supported service category. In addition, the company could provide potential updates regarding its planned crackdown on password sharing.

The Netflix logo is pictured at the 2022 Paris Motor Show in Paris, France, October 17, 2022. REUTERS/Stephane Mahe

In specific market moves, shares of Alcoa (AA) fell Thursday after the US aluminum producer reported lower prices for its aluminum products at the end of 2022.

Shares of Procter & Gamble (PG) fell nearly 1% Thursday morning after the company raised its full-year sales forecast on the back of price increases for transportation, goods and labor costs and the impact of a strong U.S. dollar on its overseas revenue. .

Shares of Amazon (AMZN) fell 2% as the company announced it was shutting down its AmazonSmile charitable donation program. The decision to end the decade-old program is the company’s latest cost-cutting decision.

In commodities markets, West Texas Intermediate (WTI) rose nearly 1% to $80 a barrel. At the same time, gas prices have increased by 5.33% since the end of 2022, according to AAA data.

Danny Romero, Yahoo Finance correspondent. Follow her on Twitter @tweet

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