Stock 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% at 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.”
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“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 US 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.