After moving notably lower over the course of the previous session, stocks are likely to see further downside in early trading on Thursday. The major index futures are currently pointing to a sharply lower open for the markets, with the Dow futures down by 123 points.
The downward momentum for the markets is partly due to lingering concerns about the outlook for the Federal Reserve's asset purchase program.
In Congressional testimony on Wednesday, Fed Chairman Ben Bernanke acknowledged that upbeat economic data could lead the central bank to scale back the program in the next few meetings.
Adding to the worries, the minutes of the latest Fed meeting said a number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting.
While the Fed indicated that any tapering of the asset purchase program will depend on evidence of sufficiently strong and sustained growth, traders seem to expect incoming data to show signs of continued economic improvement.
Negative sentiment has also been generated by a report from Markit Economics and HSBC showing that Chinese manufacturing activity contracted in May.
The report showed that the purchasing managers index fell to 49.6 in May from 50.4 in April, with a reading below 50 indicating a contraction. Economists had expected the index to remain unchanged.
"The HSBC manufacturing PMI in May dropped below 50 and the details suggest continued weakness in the short run," Danske Bank said in a research note.
"The weakness in May appears to have been increasingly driven by domestic demand," the firm added. "On a positive note, export orders appear to be stabilizing."
Traders are also digesting a recent report from the Labor Department showing a bigger than expected drop in weekly jobless claims in the week ended May 18th.
Although the bigger than expected drop in jobless claims is a positive sign for the labor market, the data is also likely to add to concerns about the Fed scaling back stimulus.
While most stocks are likely to come under pressure in early trading, shares of Hewlett-Packard (HPQ) may buck the downtrend after the PC giant reported better than expected second quarter earnings and raised its full-year guidance.
Stocks showed a substantial downturn over the course of the trading day on Wednesday after seeing some strength in morning trading. Renewed worries about the Fed tapering its asset purchase program contributed to the sharp pullback by the markets.
The major averages climbed off their worst levels going into the close but still ended the day firmly negative. The Dow fell 80.41 points or 0.5 percent to 15,307.17, the Nasdaq tumbled 38.82 points or 1.1 percent to 3,463.30 and the S&P 500 slid 13.81 points or 0.8 percent to 1,655.35.
In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Thursday. Japan's Nikkei 225 Index plummeted by 7.3 percent, while Hong Kong's Hang Seng Index tumbled by 2.5 percent.
The major European markets have also shown notable moves to the downside on the day. While the U.K.'s FTSE 100 Index has slumped by 1.8 percent, the French CAC 40 Index and the German DAX Index are down by 2.5 percent and 2.6 percent, respectively.
In commodities trading, crude oil futures are sliding $1.27 to $93.01 a barrel after falling $1.90 to $94.28 a barrel on Wednesday. Gold futures, which fell $10.20 to $1,367.40 an ounce in the previous session, are climbing $22 to $1,389.40 an ounce.
On the currency front, the U.S. dollar is trading at 101.55 yen compared to the 103.16 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2897 compared to yesterday's $1.2857.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.