US stock index futures changed little in overnight trading Thursday after all three major averages lost for three days to end the day higher.
Futures contracts linked to the Dow Jones Industrial Average gained 18 points. S&P 500 futures rose 0.08% while Nasdaq 100 futures saw a slight decrease.
During regular trading, the Dow rose 434 points, up 1.29%. The S&P 500 and Nasdaq Composite gained 1.22% and 0.72%, respectively.
Despite Thursday’s strong session, key averages are on track to heavy losses for the week as inflation fears hit sentiment.
The Dow is down 2.18% for the week while the S&P is down 2.84%. Tech stocks were particularly hard hit, dragging the Nasdaq down 4.56% for the week.
“Higher inflation is likely to remain in the spotlight as the post-pandemic recovery accelerates,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note. “Although we assume that fears of inflation lead to volatility attacks and we continue to position ourselves for reflation, we also see such market fluctuations as an opportunity to gain exposure to structural winners.”
The Centers for Disease Control and Prevention on Thursday relaxed guidelines, stating that in most cases, fully vaccinated people do not need to wear masks indoors or outdoors.
The stocks, which were hardest hit by the ongoing rally, rebounded shortly after the announcement, with the NYSE Arca Airline Index ending the day nearly 2% higher.
The market’s volatility this week is due to the fact that economic data is pointing to inflation. The consumer price index rose by 4.2% year-on-year in April. This was the fastest level since 2008. This has raised fears that the Federal Reserve may be forced to revoke its accommodative monetary policy.
Still, the earnings season was stronger than expected and some believe that this bull market has more leeway and that investors should benefit from falls.
“The turnaround is strong enough to keep markets rising even as bond yields rise in anticipation of the central bank tightening,” said Robert Buckland, equity strategist at Citi, in a note. “So buy short-term dips, as we may see now. There is a time to be more careful, but that might be next year, not this.”
April retail sales will be released on Friday along with industrial production and consumer sentiment figures.
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