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Dow Futures Drop 165 Points Amid Economic Slowdown Concerns

U.S. stocks are expected to open lower on Wednesday due to worries about an economic slowdown and disappointing earnings from electric vehicle giant Tesla (NASDAQ: TSLA). The Dow futures contract fell 165 points (0.5%), while S&P 500 and Nasdaq 100 futures decreased 0.7% and 1.1%, respectively.

Tesla logo
Tesla logo

The Fed's Beige Book revealed that the U.S. economy had stalled recently, with hiring and inflation slowing and access to credit becoming more limited. This marks a decline in sentiment compared to the resilient economy portrayed in the March report, published before the banking crisis erupted.

Inflation Remains Problematic Despite Slowing Economy

Despite signs of a slowing economy, Federal Reserve Bank of New York President John Williams stated that inflation remains problematic, and the U.S. central bank will act to lower it. The Fed is anticipated to tighten monetary policy by 25 basis points in early May, which could be the last hike of the year as the world's largest economy potentially contracts.

Upcoming Economic Data and Central Bank Speakers

On Thursday, jobless claims and existing home sales data will be released. At the same time, Federal Reserve Governor Christopher Waller, Atlanta Fed President Raphael Bostic, and Cleveland Fed President Loretta Mester are scheduled to comment on the U.S. economy.

Tesla's Disappointing Earnings Impact Stock Prices

Tesla's stock traded 7% lower after the electric vehicle manufacturer missed first-quarter estimates and reported its lowest quarterly gross margin in two years. In contrast, IBM (NYSE: IBM) stock rose nearly 2% premarket after beating first-quarter profit expectations and signaling better-than-expected IT services demand.

More Earnings Expected from Major Companies

More earnings are due from telecom firm AT&T (NYSE: T), financial services company American Express (NYSE: AXP), carrier Alaska Air (NYSE: ALK), and private investment firm Blackstone Group (NYSE: BX).

Oil Prices Slump to Lowest Since Late March

Oil prices dropped to their lowest since late March on Thursday, with U.S. crude futures trading 1.7% lower at $77.83 a barrel and Brent contract falling 1.6% to $81.81. The decline is largely attributed to concerns about global demand, especially the possibility of the U.S. entering a recession later this year. According to the U.S. Energy Information Administration, this has overshadowed the news of U.S. crude stockpiles falling by 4.6 million barrels last week.

Gold Futures Rise and EUR/USD Trades Higher

Finally, gold futures increased by 0.4% to $2015.85/oz, while EUR/USD traded 0.1% higher at 1.0964.