Thursday June 23rd

U.S. stock market index futures rose on Thursday, as the market tried recover some of the steep losses suffered in 2022, even as Wall Street continued to weigh recession risks. Futures tied to the S&P 500 traded 0.4% higher, while the Dow Jones Industrial Average futures were up 59 points, or 0.2%. Nasdaq 100 futures rose 0.5%. The major averages came into Thursday’s session posting strong gains for the week. The S&P 500 and Nasdaq Composite are up more than 2% in that time, while the Dow has risen nearly 2%. To be sure, stocks closed slightly lower on Wednesday as investors weighed the likelihood of a recession. Federal Reserve Chair Jerome Powell is set to speak on monetary policy for a second day Thursday with congressional lawmakers. On Wednesday, Powell said the central bank is “strongly committed” to bringing down inflation. He also noted that a recession is a “possibility,” a fear that has continued to weigh on Wall Street. “The odds are more likely in favor of a recession than not,” Dan Greenhaus, Solus Alternative Asset Management chief strategist, said on CNBC’s “Closing Bell: Overtime.” “That speaks to the degree of tightening that the Federal Reserve is going to have to do now, having not done so in prior periods when perhaps they would have avoided some of the problems that are going to happen as a result.” “Unfortunately, it’s going to be more economic pain than people at least six months ago anticipated, but are increasingly coming around to the reality that that’s probably what’s going to happen,” he added. UBS is the latest investment bank this week to raise its odds of a recession to 69%, citing lackluster data last week in housing, industrial production and capital goods. “We are now watching out for any further negative follow-through or whether we simply hit a local peak and some growth momentum in the hard data resumes,” UBS said in a Thursday note. Citigroup increased its odds of a recession to 50%, citing a slide in consumer demand that could make it more difficult for the Federal Reserve to achieve a soft landing. Goldman Sachs said the probability of a downturn is “higher and more front-loaded” than it was previously. In a Monday note, the firm raised its bet of a U.S. recession to 30%, up from 15%, over the next year. It increased those odds to 48%, up from 35%, over the next two years. On Thursday, investors will be looking forward to fresh jobless claims data. Powell will also give remarks to the House, after having addressed the Senate Wednesday. The remarks are part of a congressionally mandated semiannual report on monetary policy. Chinese stocks led gains in a mixed trading session in Asia-Pacific as investors continued to monitor recession concerns on Thursday. Mainland Chinese markets struggled for direction initially, but closed in the green. The Shenzhen Component jumped 2.19% to close at 12,514.73, while the Shanghai Composite was up 1.62% at 3,320.15. Hong Kong’s Hang Seng index briefly rose 2% and closed 1.26% higher at 21,273.87, and the Hang Seng Tech index gained 2.28%. Alibaba jumped 6.4% and Xpeng spiked nearly 10%. In Japan, the Nikkei 225 was mildly higher at 26,171.25, and the Topix declined fractionally to close at 1,851.74. South Korea’s Kospi gave up early gains to fall 1.22% to 2,314.32, and the Kosdaq declined 4.36% to 714.38. Oil prices edged higher on Thursday after earlier falls as investors weighed the risks of recession and how fuel demand will be affected by rising interest rates and tight supplies. Brent crude futures rose by 38 cents, or 0.3%, to $112.12 by 1204 GMT, having dropped as low as $108.04 earlier in the session. U.S. West Texas Intermediate (WTI) crude futures were up 32 cents, or 0.3%, at $106.51 after touching a session low of $102.32. Both benchmarks plunged 3% on Wednesday and are at their lowest since mid-May. Gold traded lower on Thursday as a stronger dollar and remarks from U.S. Federal Reserve Chair Jerome Powell about the central bank’s commitment to tame rising prices dimmed its safe-haven appeal. Spot gold fell 0.4% to $1,829.89 per ounce by 1056 GMT. U.S. gold futures inched 0.4% lower to $1,830.70. While the precious metal is considered a hedge against inflation and economic instability, it also contends with the dollar as a safe-store of value. Therefore, a firmer dollar makes greenback-priced bullion more expensive for overseas buyers.