Dow Futures Slip, Tesla Stock Rises, European Rate Hike Ahead—and What Else Is Happening in the Stock Market Today

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Wall Street continues to watch corporate earnings.

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Stocks slipped Thursday as inflation and recession worries remained salient. Attention is falling on the European Union, where the central bank is expected to raise interest rates for the first time in 11 years.

Futures for the Dow Jones Industrial Average retreated 100 points, or 0.3%, after the index rose 47 points on Wednesday to close at 31,874. S&P 500 futures signaled a start 0.3% into the red with the tech stock-heavy Nasdaq poised to fall 0.3%.

Overseas, Milan’s FTSE MIB tumbled 2.6%, leading declines in Europe following the resignation of Italian Prime Minister Mario Draghi. Hong Kong’s Hang Seng Index ended the day 1.5% lower.

As investors await the next key decision on monetary policy and interest rates in the U.S. next week, the European Central Bank (ECB) is expected to raise rates for the first time since 2011.

“Markets are getting excited as today is widely expected to bring the first ECB rate hike in over a decade,” said Henry Allen, an analyst at Deutsche Bank. “Unusually for a major central bank decision, there’s serious doubt about what’s going to happen.”

The ECB has telegraphed that it would start the hiking cycle with a standard, 25 basis-point raise on Thursday—but multiple press reports this week citing central bank sources have mooted a larger, 50 basis-point move.

“Not to put too fine a point on it, the choice facing the European Central Bank today is akin to frying pan, or fire,” said Michael Hewson, an analyst at broker Oanda. “The fact is a rate rise of 25 basis points or even 50 basis points is merely tinkering around the edges when it comes to inflationary pressures of this magnitude when headline rates are in negative territory, and the euro is down over 14% over the last 12 months.”

With inflation in the U.S. and around the world at a multidecade high, central banks are under pressure to tame red-hot prices with tighter monetary policy. The worry is that ratcheting up interest rates aggressively risks spurring a recession. The Federal Reserve has already hiked rates multiple times this year, and is expected to continue following a decision next week. The ECB decision may play a role in setting the tone ahead of the Fed’s meeting.

News of a slowdown in hiring at U.S. tech giants—among the largest listed U.S. companies—also looks to be adding pressure to stocks and feeding into fears of an economic slowdown. Microsoft (ticker: MSFT) announced on Wednesday that it was axing many job openings, while Google parent Alphabet (GOOGL) has suspended hiring for the next two weeks.

“U.S. futures are flirting with negative territory as Alphabet and Microsoft announce hiring assessments.,” said Jeffrey Halley, an analyst at broker Oanda.

Investors will continue to closely watch earnings—especially how company profits are holding up amid inflation and the extent to which corporates are predicting an economic slowdown. Companies reporting in the day ahead include American Airlines (AAL), AT&T (T), Philip Morris International (PM), and Snap (SNAP). 

Here are three stocks on the move Thursday:

Tesla (TSLA) rose less than 2% in U.S. premarket trading, after the electric-vehicle company notched its sixth straight earnings “beat,” outpacing analysts’ estimates for quarter earnings again. Second-quarter adjusted earnings per share came in at $2.27, ahead of the $1.80 expected by analysts on Wall Street.

SAP (SAP) fell 3.5% in the premarket, after the software giant posted better-than-expected revenue growth in the second quarter but reported profit that fell short of estimates. SAP notched revenue of €7.5 billion ($7.6 billion) in the last quarter, up 13%, while earnings came under pressure from a decision to exit Russia.

Nokia (NOK) gained 7% in the premarket, after the telecom group beat out analysts’ estimates for quarterly results. Nokia reported second-quarter earnings per share of €0.10, ahead of the €0.08 expected, with sales of €5.9 billion beating out estimates of €5.6 billion.

Write to Jack Denton at jack.denton@dowjones.com