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2026-02-20 22:17:49
[US Stock Futures Fall Across the Board Amid Slowing GDP and Rising PCE] ⑴ US stock index futures fell across the board on Friday, as the market reacted negatively to the double whammy of a sharp economic slowdown and unexpectedly high inflation. As of 8:56 a.m. ET, Dow Jones futures were down 0.22%, S&P 500 futures were down 0.28%, and Nasdaq 100 futures were down 0.43%. A chief investment strategist at BOK Financial noted that a combination of lower-than-expected growth and higher-than-expected inflation is generally not good news for the stock market. ⑵ Economic data showed an unusual divergence. Fourth-quarter GDP annualized growth plummeted to 1.4% from 4.4% in the third quarter, far below the expected 3.0%. The record government shutdown and slowing consumer spending were the main drags. Meanwhile, core PCE rose 0.4% month-over-month in December and climbed to 3% year-over-year, both exceeding expectations and reaching their highest level since February 2025. ⑶ Market expectations for the Federal Reserve's policy path remain cautious. Traders are still betting on a possible Fed rate cut in June, but the data mix hasn't reinforced this timeline. Analysts believe that despite slowing growth, sticky inflation means the Fed doesn't need aggressive rate cuts, and current data still aligns with this narrative. (4) Tech stocks continue to be under pressure. Concerns about overvaluation and the effectiveness of AI investments have been weighing on the tech sector in recent months. Akamai Technologies fell 7.4% pre-market after expecting adjusted first-quarter profits to be lower than Wall Street expectations. Copart fell 10.1% after second-quarter profits and revenue both declined. (5) Private equity stocks faced selling pressure. Blue Cat Capital fell 1.8% pre-market, after falling 5.9% the previous day, as its latest strategy shocked investors and dragged down its peers. KKR and Apollo Global Management each fell 1%. (6) Geopolitical risks continue to unfold. Oil prices retreated from six-month highs as investors assessed the impact of US-Iran tensions. Trump warned Iran that it must reach an agreement on its nuclear program or face very serious consequences. Energy stocks, including ExxonMobil and Chevron, fell slightly after rising in the previous trading day. (7) The market is also focused on the Supreme Court's potential ruling on Trump's tariffs. According to Wharton's budget model, if the tariffs are rejected, the U.S. would need to refund more than $175 billion in tariffs, a potential risk that adds uncertainty to the market.
