US pre-open: Futures sink ahead of GDP data, Salesforce plummets

30th May 2024 10:16

(Sharecast News) - Rising bond yields were set to weigh heavily on stocks again on Thursday, with stock futures falling sharply ahead of the opening bell on Wall Street, while software firm Salesforce tumbled after its quarterly earnings.

Dow futures were down more than 300 points (-0.9%), with the benchmark index set for fall for the sixth time in eight days since topping the 40,000 mark for the first time on 17 May. Futures on the S&P 500 and Nasdaq were also both down 0.5% as both indices continue to retreat from recent record highs.

The 10-year US Treasury yield was steady on Thursday, having topped the 4.6% mark for the first time in four weeks. That follows a round of poor Treasury sales earlier in the week, with the two, five and seven-year notes seeing weak demand.

"The two-year yield - which best captures the Fed's rate expectations - shortly hit the 5% psychological mark, the 10-year yield spiked to 4.63% and the US dollar index advanced to the 50-[day-moving-average] and is consolidating near that level this morning," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The market's focus was now turning towards US GDP data on Thursday morning, ahead of the Fed's preferred gauge of inflation - the core PCE number - due on Friday.

"The US GDP is expected to have slowed significantly in the Q1, with - however - a significant rise in price pressures (that's already priced in), while the core PCE print for April could hint at some easing in the latest pickup in inflation," Ozkardeskaya said.

The GDP data, due out at 0800 EDT, is expected to show that the annual rate of economic growth slowed to 1.3% in the first quarter, from 1.6% in the fourth quarter of 2023. The GDP price index is expected to have held steady at 3.1%.

In other news, investors will be watching wholesale inventories data, the goods trade balance and pending home sales, along with scheduled speeches from Federal Reserve members John Williams and Lorie Logan.

In corporate news, Salesforce was down 16% in pre-market trade after the company cited "elongated deal cycles, deal compression and high levels of budget scrutiny" that impacted first-quarter results, with revenues rising a less-than-expected 11% to $9.13bn. Sales guidance for the current quarter also disappointed.

PC maker HP was rising after topping earnings estimates for its fiscal second quarter, while software group Pure Storage beat forecasts comfortable with its first-quarter profits.