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By Peter Nurse
Investing.com -- U.S. stocks are seen opening higher Wednesday, regaining some ground after the previous session’s hefty losses, but confidence remains weak amid growing fears of a global economic slowdown.
At 7 AM ET (1100 GMT), the Dow Futures contract was up 360 points, or 1.1%, S&P 500 Futures traded 38 points, or 0.9%, higher and Nasdaq 100 Futures climbed 115 points, or 0.9%.
The main Wall Street indices closed sharply lower Tuesday, with the tech-heavy Nasdaq Composite leading the way, dropping almost 4% to a fresh 52-week low. The blue-chip Dow Jones Industrial Average dropped over 800 points, or 2.4%, and the broad-based S&P 500 fell 2.8%.
The Nasdaq is over 12% lower so far this month, while the S&P 500 has dropped almost 8% and the Dow over 4%.
Global growth fears are behind the weakness, with a prolonged outbreak of Covid-19 cases in China sparking concerns that the second largest economy in the world could suffer from a severe slowdown.
Additionally, the Federal Reserve is expected this year to aggressively raise interest rates, from the current 0.5%, to combat persistent and red-hot inflation, prompting concerns that these moves could cause the U.S. economy to contract.
“We assume conservatively that a Fed funds rate moving well into the 5% to 6% range will be sufficient to do the job,” said analysts at Deutsche Bank, in a note, adding that this “will push the economy into a significant recession by late next year.”
It’s the tech sector that has felt the brunt of these concerns, especially after last week’s disappointing Netflix (NASDAQ:NFLX) subscriber numbers.
Microsoft (NASDAQ:MSFT) stock is trading higher premarket, allaying some of those fears, after the software giant forecast double-digit revenue growth for the next fiscal year after the close Tuesday, driven by demand for cloud computing services.
On the flip side, Alphabet (NASDAQ:GOOGL) stock dropped premarket after Google’s parent company missed expectations for its first quarterly revenue after the war in Ukraine hurt YouTube ad sales.
Robinhood (NASDAQ:HOOD) will also be in focus after the retail brokerage announced plans to lay off about 9% of its full-time employees, while the Wall Street Journal reported that the management of Mattel (NASDAQ:MAT) has held talks to sell the toymaker to private equity companies.
There are also some significant earnings releases due Wednesday, from companies such as Meta Platforms (NASDAQ:FB), T-Mobile (NASDAQ:TMUS), and Boeing (NYSE:BA).
Oil prices rose Wednesday after Gazprom, Russia's state-owned energy giant, confirmed that it has stopped supplies to Poland and Bulgaria, increasing concerns about Europe’s energy security.