Futures on the Dow Jones Industrial Average were down 94 points. S&P 500 futures lost 0.4% and Nasdaq 100 futures shed 0.5%.
A crackdown on bitcoin by China was hurting market sentiment overnight, especially with technology shares. China’s central bank said all cryptocurrency related activities are illegal. Overseas crypto exchanges providing services in mainland China are also illegal, the PBOC said. Bitcoin dropped 5% and ether lost 9%.
Crypto-related stocks fell in premarket trading. Coinbase lost more than 3%. Robinhood shed 2%. Square was off by 1.6%.
Nike shares fell 5% in premarket trading after the sneaker giant reported quarterly revenue that missed analysts’ expectations due to softening demand in North America. The company also lowered its fiscal 2022 outlook because of supply chain issues out of Vietnam.
This week, the market staged a two-day relief rally beginning on Wednesday after the Federal Reserve signaled no imminent removal of its ultra-easy monetary policy. Investors also bet that the debt crisis of China’s real estate giant Evergrande wouldn’t trigger a ripple effect across global markets.
The blue-chip Dow advanced 500 points on Thursday for its best daily performance since July 20. The S&P 500 gained 1.2%, while the tech-heavy Nasdaq Composite rose 1%.
The major averages have wiped out the steep losses earlier this week and are on pace to post a winning week heading into Friday. The Dow is up 0.5% week to date, on pace to break a three-week losing streak. The S&P 500 have gained 0.4% this week, and the Nasdaq is up about 0.1%.
Investors were still waiting to see if China’s Evergrande, the failing developer at the center of the property crisis in the country, will pay $83 million in interest on a U.S. dollar-denominated bond that was due Thursday. The company so far is staying silent and has 30 days before it technically defaults. Concerns about Evergrande hit global markets to start the week with the Dow shedding more than 600 points.
“If Evergrande fails, the exposure outside of China appears limited, and since the government will do whatever it takes to contain it,” said Edward Moya, senior market analyst at Oanda. “If China is successful, global risk appetite may not be dealt that much of a blow.”
On Wednesday, the Fed said a tapering of its monthly bond-buying program “may soon be warranted,” but it did not give a specific timeline on when it may begin moderating its purchases.
“While we are far from the end of QE and near-zero rates, the tide seems to be beginning to change,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network. “So far, the market had welcomed bad news as good news, but a market reacting to signs of an economy able to stand on its own without the monetary policy crutches is a refreshing change.”