Stock futures pointed to a lower session on Thursday after a less-hawkish Federal Reserve raised worries over the health of the U.S. economy, and U.S. consumer prices rose in May.
S&P 500 futures were down 0.53%, Dow Jones Industrial Average futures fell 0.47%, and Nasdaq futures declined 0.57%.
Core consumer prices in May rose at a better-than-expected pace, according to the Bureau of Labor Statistics. Excluding energy and food, core prices rose 0.2%, above expectations for a 0.2% decline. The headline number also advanced 0.2%, a touch below an expected 0.3% increase.
The number of new applications for unemployment benefits broke a four-week contraction, climbing by 13,000 to 277,000 in the past week. The measure remains around multi-year lows.
Business conditions in the Philadelphia region improved at a faster-than-expected pace in June. The Philly Fed Business Outlook improved to a reading of positive 4.7 compared to a negative reading a month earlier. Analysts had expected a reading of positive 1.1.
The results of the Fed's June meeting weren't a surprise. The central bank left rates unchanged just as Wall Street had pegged. What was a surprise, though, was the shedding of hawkish rhetoric that characterized Fed chatter in recent months. The number of Fed officials who expect to see just one rate hike this year rose to six members, up from just one official at the central bank's meeting in April.
Market reaction to the Fed's expected slower pace highlights an interesting paradox: Investors want lower rates for longer but not at the expense of a weaker U.S. economy.
Fed Chair Janet Yellen did reiterate her confidence in the strength of the U.S. economy, however, but cautioned that investors not overreact to one piece of data, such as the weak May jobs report. Weakness in the first quarter appears to be temporary, Yellen noted at a press conference following the meeting's conclusion.
Crude oil continued its losing streak, extending losses into a sixth straight session. Oil slid on Wednesday after a decline in U.S. inventories over the past week was narrower than analysts had expected. Investors have been pinning their hopes on slower U.S. production to counter record-high output elsewhere on global markets.
West Texas Intermediate crude oil fell 1.4% to $47.32 a barrel on Thursday.
Jabil Circuit (JBL) - Get Report , an Apple supplier, fell in premarket trading after issuing weak guidance for its fiscal fourth quarter and full year. The chipmaker expects earnings no higher than 35 cents a share in its fourth quarter, a far cry from market expectations of 53 cents. The weaker forecasts raised concerns over demand for Apple's products, including its iPhone which recently saw its first quarterly sales decline.
Rite Aid (RAD) - Get Report dropped more than 1% after missing first-quarter estimates on its top- and bottom-lines. The pharmacy chain earned an adjusted per-share profit of 1 cent, down from earnings of 2 cents a year earlier. Analysts had expected earnings of 5 cents a share. Revenue rose 23% to $8.18 billion, though missed consensus of $8.24 billion. Same-store sales increased 0.4%, driven by front-end sales which grew 1.2%.
Envision Healthcare (EVHC) tumbled 7% after agreeing to merge with AmSurg (AMSG) , creating a physician services behemoth with an enterprise value of about $15 billion. Shareholders of Envision and Amsurg will own about 53% and 47%, respectively, of the combined company. The new company will encompass a wide array of outsourced physician services in the emergency, hospitalist, anesthesia, radiology and children's services areas.
Chipmaker Cavium (CAVM) slid 7.3% after agreeing to buy network equipment maker QLogic (QLGC) for $1.36 billion in an effort to diversify earnings away from the highly competitive semiconductor market. Cavium will pay $15.50 a share for QLogic, composed of $11 in cash and 0.098 of a Cavium share. The deal values QLogic at roughly $1 billion.