Dow Futures Slide Amid Rate Hike Worries and Salesforce Plunge
Dow futures drop as rate hike fears and a Salesforce slump hit the stock market. Investors watch for key economic data on GDP and jobless claims.
U.S. stock futures indicated further losses on Thursday due to ongoing fears about sustained high interest rates and a significant drop in Salesforce (CRM) shares, which dampened investor confidence.
Futures for the Dow Jones Industrial Average (YM=F) fell 0.9%, following a 400-point loss on Wednesday. S&P 500 futures (ES=F) declined by 0.4%, and Nasdaq 100 futures (NQ=F) were down around 0.3%.
The stock market has been under pressure due to renewed concerns about the Federal Reserve's potential delay in cutting interest rates, prompted by inflation data that remains higher than expected. Additionally, hopes for a broad market rally driven by Nvidia's (NVDA) strong earnings were not realized.
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These interest rate fears have pushed U.S. bond yields to their highest levels since early May, with the 10-year Treasury yield (^TNX) rising above 4.5%. While it slightly retreated on Thursday, it stayed above 4.6%.
Salesforce added to the market's woes, with its shares dropping 15% in pre-market trading after the company projected its slowest sales growth in history.
Attention is now on Thursday’s economic data releases, as investors look for signs of the U.S. economy's resilience, which might complicate the Fed's efforts to lower interest rates. Reports on first-quarter GDP and weekly jobless claims are expected.
Retail earnings reports provided additional insights into consumer behavior and economic health. Kohl's (KSS) shares plummeted after reporting an unexpected quarterly loss and reducing its annual sales forecast. Best Buy (BBY) also reported a larger-than-expected decline in comparable sales as consumers became more cautious with their spending.
Chewy's Unexpected Surge
Chewy (CHWY) experienced a 27% jump in its share price after reporting better-than-expected quarterly results, though shares dipped slightly pre-market. Despite a year-over-year decline in active customers, the company's margin improvement and positive demand outlook impressed investors. CEO Sumit Singh emphasized the improving demand environment and detailed plans to open additional veterinary clinics, aiming to integrate them with Chewy’s online services.
Increase in PC Demand
HP Inc. (HPQ) shares rose 3% in pre-market trading after reporting strong quarterly results. CEO Enrique Lores mentioned an uptick in companies upgrading computers ahead of the October 2025 end-of-support deadline for Windows 10. The introduction of HP’s AI-powered PCs is expected to further fuel this upgrade cycle. Analyst Amit Daryanani from Evercore ISI believes HP is well-positioned to benefit from this trend, predicting growth acceleration in the latter half of the year and into FY25.
Challenges for Salesforce
Salesforce (CRM) shares dropped 16% in pre-market trading following a disappointing earnings report. The company's performance obligations grew by 10%, falling short of the expected 11%, with the earnings call highlighting economic concerns affecting deal closures. Citi analyst Tyler Radke noted that the weak second-quarter guidance could indicate ongoing challenges such as competition and deal delays. With slowing growth and uncertain forecasts, analysts remain cautious, awaiting a more stable economic environment before becoming more optimistic about Salesforce's outlook.
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