The major U.S. index futures are currently pointing to lower open on Thursday, with stocks likely to see further downside after moving notably lower over the two previous sessions.
Ongoing concerns about turmoil among regional banks may weigh on Wall Street, with shares of PacWest Bancorp (PACW) plummeting by 37.2 percent in pre-market trading.
The steep drop by PacWest comes after the company confirmed that it its reviewing strategic options, including a potential sale.
However, the bank said it has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank (FRC) and other news.
Tennessee-based First Horizon (FHN) is also seeing substantial pre-market weakness after the regional lender and TD Bank (TD) announced they have called off their $13.4 billion merger agreement.
Overall trading activity may be somewhat subdued, however, as traders look ahead to the closely watched monthly jobs report on Friday.
Economists currently expect the report to show employment increased by 179,000 jobs in April after jumping by 236,000 jobs in March, while the unemployment rate is expected to hold at 3.5 percent.
With the Federal Reserve signaling future monetary policy decisions will be "data-dependent," the jobs report could have a significant impact on the outlook for interest rates.
Stocks saw substantial volatility following the Federal Reserve's monetary policy announcement on Wednesday before eventually ending the session mostly lower. With the decrease on the day, the major averages added to the steep losses posted on Tuesday.
The major averages finished the session just off their worst levels of the day. The Dow slid 270.29 points or 0.8 percent to 33,414.24, the Nasdaq fell 55.18 points or 0.5 percent to 12,025.33 and the S&P 500 dropped 28.83 points or 0.7 percent to 4,090.75.
The lower close on Wall Street came after the Federal Reserve announced its widely expected decision to raise interest rates by another quarter but appeared to signal a potential pause in rate hikes.
The Fed decided to raise the target range for the federal funds rate by 25 basis points to 5 to 5.25 percent, making the tenth straight rate hike.
The unanimous decision to continue raising rates came as the Fed noted inflation remains elevated while also observing that job gains have been robust in recent months and the unemployment rate has remained low.
Notably, however, the Fed omitted a sentence included in the March statement that said the central bank "anticipates that some additional policy firming may be appropriate" to return inflation to 2 percent over time.
The Fed also tweaked language regarding the outlook for monetary policy, saying "the extent to which additional policy firming may be appropriate" rather than "the extent of future increases in the target range."
However, Fed Chair Jerome Powell's comments during his post-meeting press conference led to renewed uncertainty about the outlook for rates.
Powell said the central bank would take a "data-dependent approach" to future monetary policy decisions and stressed a decision on a pause was not made at the meeting.
The next monetary policy meeting is scheduled for June 13-14, with CME Group's FedWatch Tool currently indicating an 87.1 percent chance the Fed will leave rates unchanged.
"The Fed signaled that there will likely be a pause in June, but it came with a caveat that the FOMC remains highly attentive to inflation and is data dependent," said Ryan Sweet, Chief US Economist at Oxford Economics.
"In other words, if there is any upside surprise to inflation, the central bank won't hesitate to resume hiking interest rates because they're determined to break inflation's back," he added. "As such, there is a risk that the pause is temporary."
Oil service stocks extended the sell-off seen during trading on Tuesday, with a continued nosedive by the price of crude oil weighing on the sector.
Reflecting the weakness in the sector, the NYSE Arca Oil Index tumbled by 2.2 percent to its lowest closing level in over a month.
Substantial weakness also emerged among financial stocks, dragging the NYSE Arca Broker/Dealer Index and the KBW Bank Index down by 2.2 percent and 1.9 percent, respectively.
Semiconductor, tobacco and chemical stocks also came under pressure over the course of the session, while significant strength remained visible among computer hardware and airline stocks.
Commodity, Currency Markets
Crude oil futures are rising $0.29 to $68.89 a barrel after plunging $3.06 to $68.60 a barrel on Wednesday. Meanwhile, after advancing $13.70 to $2,037 ounce in the previous session, gold futures are climbing $8.20 to $2,045.20 an ounce.
On the currency front, the U.S. dollar is trading at 134.70 yen versus the 134.71 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1026 compared to yesterday's $1.1062.
Asia
Asian stocks ended flat to slightly higher on Thursday despite weak Chinese data and mixed signals from the U.S. Federal Reserve on rate-hike plans. Japanese markets were closed on account of Greenery Day.
Chinese shares rose notably after data showed travel in China surged over the Labour Day holidays. Investors shrugged off separate data pointing to a staggered economic recovery.
A private survey showed China's manufacturing sector unexpectedly shrank in April due to softer domestic demand.
The benchmark Shanghai Composite Index climbed 0.8 percent to 3,350.46, with financials and state-owned enterprises leading the surge. Hong Kong's Hang Seng Index rallied 1.3 percent to 19,948.73.
After the Federal Reserve raised rates, the Hong Kong Monetary Authority today raised its base rate charged through the overnight discount window by 25 basis points to 5.50 percent, the highest since January 2008.
Seoul stocks recovered from an early slide to end on a flat note, with the Kospi finishing marginally lower at 2,500.94 after Fed Chair Jerome Powell said inflation remains too high and it is too soon to say rate hiking cycle is over.
Vaccine maker SK Bioscience soared 16.4 percent after it reportedly won a contract from multinational pharmaceutical company Merck & Co.
Australian markets ended little changed as financials declined, offsetting gains in the mining and energy sectors. National Australia Bank plunged 6.4 percent after its half-year profit came in below expectations. Peers ANZ, Commonwealth and Westpac lost 2-4 percent.
Mining heavyweights BHP and Rio Tinto rose 1.6 percent and 1.3 percent, respectively. Woodside Energy added 1 percent and Santos gained 1.9 percent after oil prices rebounded from a three-day rout.
Australia's services activity grew the most in a year in April, while growth in retail sales doubled in March, driven by the combined growth in the food-related spending, separate data showed.
Europe
European stocks traded lower on Thursday as investors digested the Fed's 25-basis point rate hike announcement and a widely expected 25 basis point rate hike by the European Central Bank (ECB).
In economic news, Eurozone PMI Service PMI was finalized at 56.2 in April, up from March's 55.0 and marking a 12-month high.
Industrial producer prices decreased by 1.6 percent in the euro area in March compared to February, Eurostat said. Investors are also reacting to German exports data and service PMI readings from the region.
While the French CAC 40 Index has slid by 0.8 percent, the U.K.'s FTSE 100 Index is down by 0.6 percent and the German DAX Index is down by 0.5 percent.
ArcelorMittal, the world's second-largest steelmaker, has moved notably lower after its first quarter sales and earnings declined.
Danish drug developer Novo Nordisk has plunged after saying it would have to halve the supply of starter doses of its popular Wegovy weight-loss drug in the United States due to high demand.
Mothercare has also plummeted after the baby products retailer warned it may require waivers for future debt covenant tests.
Meanwhile, Domino's Pizza has climbed after posting record first-quarter sales and launching a £20 million share buyback.
Oil & gas giant Shell has also risen in London after its first-quarter profit beat forecasts despite lower energy prices.
Home and clothing retailer Next Plc has also higher after maintaining its sales and profit guidance.
German carmaker BMW has also move to the upside after reporting a higher earnings margin for its cars segment.
U.S. Economic Reports
A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday showing first-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended April 29th.
The report said initial jobless claims climbed to 242,000, an increase of 13,000 from the previous week's revised level of 229,000.
Economists had expected jobless claims to rise to 240,000 from the 230,000 originally reported for the previous week.
The Labor Department said the less volatile four-week moving average also crept up to 239,250, an increase of 3,500 from the previous week's revised average of 235,750.
Partly reflecting a jump in the value of exports, the Commerce Department released a report on Thursday showing the U.S. trade deficit narrowed in the month of March.
The Commerce Department said the trade deficit shrank to $64.2 billion in March from a revised $70.6 billion in February.
Economists had expected the trade deficit to narrow to $63.3 billion from the $70.5 billion originally reported for the previous month.
The narrower trade deficit came as the value of exports jumped by 2.1 percent to $256.2 billion, while the value of imports slipped by 0.3 percent to $320.4 billion.
The Labor Department released another report on Thursday showing U.S. labor productivity tumbled by much more than expected in the first quarter of 2023.
The report said labor productivity plunged by 2.7 percent in the first quarter after jumping by a revised 1.6 percent in the fourth quarter.
Economists had expected labor productivity to slump by 1.8 percent compared to the 1.7 percent surge that had been reported for the previous quarter.
Meanwhile, the Labor Department said unit labor costs skyrocketed by 6.3 percent in the first quarter after shooting up by a revised 3.3 percent in the fourth quarter.
Economists had expected unit labor costs to soar by 5.5 percent compared to the 3.2 percent spike that had been reported for the previous quarter.
Stocks In Focus
Shares of Paramount Global (PARA) are moving sharply lower in pre-market trading after the media company reported weaker than expected first quarter results and slashed its quarterly dividend to 5 cents per share from 24 cents per share.
Chipmaker Qualcomm (QCOM) may also come under pressure after reporting fiscal second quarter revenues that exceeded analyst estimates but providing disappointing guidance.
On the other hand, shares of Shopify (SHOP) are seeing substantial pre-market strength after the e-commerce platform reported better than expected first quarter results and announced the planned sale of its logistics businesses.
Restaurant chain Shake Shack (SHAK) is also likely to move to the upside after reporting a narrower than expected first quarter loss on revenues that exceeded analyst estimates.
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