Stock futures bounce as investors assess start of new quarter, bond market recession indicator

Stock futures rose early Thursday as investors assessed a new quarter of trading and a troublesome bond market recession indicator.

Investors were also awaiting the official jobs report for March, which the Labor Department will release at 8:30 a.m. ET on Friday.

Dow futures gained 90 points, or 0.3%. S&P 500 futures added 0.2% and Nasdaq 100 futures rose 0.3% to kick off the first trading session of the second quarter.

The Dow Jones Industrial Average slumped on Thursday to close out the first negative quarter for stocks in two years, with losses accelerating in the final hour of trading. The Dow dropped 550.46 points, or 1.56%, to 34,678.35. The S&P 500 slid 1.57% to 4,530.41, and the Nasdaq Composite was down 1.54% to 14,220.52.

All three major averages posted their worst quarter since March 2020. The Dow and S&P 500 declined 4.6% and 4.9% respectively during the period, and the Nasdaq dropped more than 9%. Stocks did stage a late-quarter comeback in March however after sharp declines from rising interest rates and inflation marked the first part of the year.

Stocks for now shook off a recession signal from the bond market that was triggered after the closing bell Thursday. The 2-year and 10-year Treasury yields inverted for the first time since 2019. For some investors, it’s a signal that the economy is headed for a possible recession, though the inverted yield curve does not predict exactly when it will happen and history shows it could be more than a year away or longer.

“I think everybody needs to acknowledge the fact that we are obviously going to be moving into a slower economic environment,” Shannon Saccocia, chief investment officer at Boston Private Wealth, told CNBC’s “Closing Bell.”

“You need to get earnings growth from somewhere, and if it’s not going to be a secular tailwind, like fiscal spend and monetary policy looseness, then you have to look for growth elsewhere. I think we’re going to see some real nuance in trading over the course of the next three months or so as people look for that growth against this more challenging economic backdrop.”

A strong jobs report Friday could give the Fed more confidence to keep its aggressive rate-hiking plan in place this year to stifle inflation without fear of slowing the economy too much. Economists expect that about 490,000 jobs were added in March, according to the consensus estimate from Dow Jones, following a 678,000 payrolls addition in February. The unemployment rate is expected to fall to 3.7% from 3.8%, according to Dow Jones.

GameStop rallied more than 10% in extended trading after the video game retailer and meme stock announced its intentions for a stock split.

Energy prices declined on Thursday after the White House said it will release an unprecedented amount of oil from the Strategic Petroleum Reserve. Up to 1 million barrels of oil per day will be released for the next six months.

Other key indicators to watch out for include the ISM manufacturing index and the construction spending report, both of which will be released at 10 a.m. ET on Friday.