U.S. futures and European stocks both retreated on Friday following a week of mixed corporate earnings reports. With quarterly earnings data providing no clear direction, investor focus has shifted to the latest economic and inflation data in order to uncover an indication of the Federal Reserve’s interest rate policy going forward.
Futures on the S&P 500 edged 0.1% lower on Friday morning, while those on the Nasdaq 100 and Dow Jones Industrial Average declined by 0.2% and 0.1% respectively. The Stoxx Europe 600 remained relatively unchanged.
Federal Reserve Bank of Cleveland President Loretta Mester expressed her support for another interest rate hike in May to curb inflation, while Dallas counterpart Lorie Logan agreed with this sentiment, commenting that inflation has remained “much too high.”
“We are in the camp of US recession in the second half, and expect data to weaken going forward,” Mohit Kumar, a strategist at Jefferies International Ltd. observed. “Once the last Fed hike is done in May, the market will start to focus on the weak economic data, and bad data will become bad news; seasonality starts to turn in May, with May and June poor months for risky-asset performance.”