Stock futures rise after China’s central bank unexpectedly cuts rates

Yahoo Finance Live anchors discuss stock futures premarket after China cut interest rates.

Video Transcript

JULIE HYMAN: All right, our three things today starts, of course, with the markets and what we have seen, not just today, but what we've seen over the past-- of course, in the past week. But let's start with the futures, because we are seeing things turning up a little bit here this morning. One of the catalysts potentially was a Chinese rate cut. It wasn't the benchmark rate. It was one of the other reference rates there. But that seemed to give a little bit of optimism to the markets here. And we are seeing Dow futures, S&P futures, and NASDAQ futures all indicating gains.

However, it's probably not going to be enough, Brad, to turn around what we've seen on the week. So I do want to look at, let's call it a four-day chart because that'll show us what we have seen thus far this week. And it's going to be difficult for markets to climb out of the hole that we have seen.

BRAD SMITH: Absolutely. You look back to some of the historical comparisons. To this point in time, we haven't seen an eight-week move like this in the declines since the Great Depression era, in the Dow Jones Industrial Average, specifically. And so, keeping that in mind as we go into today's trading session, even if we did end the day higher, it would need to be a whole heap of a day higher, in order to erase this week's down movement.

We saw that in the S&P 500 as well. We're still in the ballpark territory, unfortunately, for the S&P 500 of a bear market. However, with the pre-market activity that we've been tracking, hopefully, we're able to at least hold off of those levels, at least on today's activity as well.

JULIE HYMAN: Yeah, let's pull it back a little bit further, to take a look at that metric for the S&P 500. Now, the S&P actually made its high, its record high, all the way back on January 3, so almost the beginning of the year. And then what we have seen here is a 19% pullback, so just shy of a bear market. And as we've been talking about, why do we care when things go into a so-called bear market, a drop of 20%, things tend to continue from there. We tend to see more of a drop.

And as we were talking about yesterday, Deutsche Bank's Bankim Chadha talking about that the average bear markets do tend to be deeper than 20%. If they are accompanied by a recession, they can be perhaps twice as deep. But he doesn't necessarily think we are in for an imminent recession here.

Let's also take a look at some of the groups and some of the movers over this four-day period and what we have seen. So here's the NASDAQ 100, which we like to look at a lot. And I'm going to go ahead and equal-weight it, so it's a little bit easier to look at here. You see Cisco over the past four days down the most by 15.8%. But they're certainly-- more than half of the movers in the NASDAQ 100 are down in this four-day period.

BRAD SMITH: Yeah, and within that four-day period, just a couple of other ones to call out here, especially when we're trying to get a better mindset of the consumer and what they've been going through as well, some of these companies we've heard earnings from, but especially considering where that discretionary spending may take place in the future and where from everything in terms of the iPhone that you have or any type of phone that you have in your pocket on a daily basis, and what that changing of the cycle for those purchases may look like, that's where you're seeing some of those declines come into play.

And then additionally here, just in tech, look at Facebook, look at Apple here. And Facebook, of course, I pulled that up, Meta Platforms rather, full mode. But look at Apple here. The declines over the past four days, 6.6% lower there. You also got Peloton, which we were breaking down earlier this week, that continues to move lower here over that broader four-day--

JULIE HYMAN: The four-day chart, yeah.

BRAD SMITH: Yeah, down by about 7.2% over that period of time. And so, all of these things considered, where that spending is taking place on what items, and are consumers leaning more into these staples that they need for this point in time, rather than what would be nice to have. And we've seen that consistently be the story. We're going to get more into that a little bit later on with one of our guests during the later, latter half of the 9:00 AM hour, specifically looking at wholesale and buying in bulk right now and where that's seeing some resurgence, too.

JULIE HYMAN: Yeah, exactly, and just a quick look at the retailers on the week as well, just to put a fine point on what Brad is talking about. Target far and away the worst performer on the week, as you might expect, down 30%. And of course, the bulk of that drop happening on the day alone when it reported earnings. Walmart down almost 20% in the week. Bed, Bath-- or Best Buy, excuse me, down 15%. I always make that mistake. It's reporting its earnings next week.

So this was really the week in which we saw a change in mindset, a change in confidence surrounding many of these companies. Part of it perhaps a pullback in consumer spending, but it seems like the bulk of it, as we see a change in inventories, a change in consumer spending patterns and the effect that that's having on margins for a lot of these companies.