US pre-open: Dow Jones futures in the red following worst session since June 2020

Wall Street futures were firmly in the red ahead of the bell after both the Dow Jones and S&P 500 booked their worst single-day losses in almost two years in the previous session.

As of 1220 BST, Dow Jones futures were down 0.98%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.05% and 1.11% weaker, respectively.

The Dow closed 1,164.52 points lower on Wednesday, more than erasing gains recorded on Tuesday and making for its worst session since June 2020.

Yesterday's heavy losses were partly fuelled by quarterly earnings from retailers Target and Walmart that revealed higher fuel costs and soft consumer demand had hurt results amid the hottest inflation seen in decades.

Markets.com's Neil Wilson said: "Earnings from Walmart and Target amounted to a red flag on the health of the consumer and helped send stocks on Wall Street to their worst daily decline since 2020. Target declined 25% as it warned on profit margins due to rising costs, a day after Walmart had hurt sentiment with a downgrade.

"Soaring freight, labour and fuel costs are hurting earnings. Discretionary spending is being hit badly due to inflation already and companies are hurting from not being able to pass it all on. Something of a big macro fall-out from the numbers from retailers this week, not that it describes anything particularly new – just perhaps that the corporates and consumers are breaking a bit sooner – demand destruction phase. This is the sort of shock you'd normally see with the likes of a big tech name, but staples are a much clearer bellwether for the real economy."

Ahead of the bell on Thursday, US department store chain operator Kohl's cut full-year earnings estimates after both group revenues and same-store sales fell short of consensus estimates, while fellow retailer BJ's Wholesale beat expectations with quarterly profits, revenue, and same-store sales.

On the macro front, jobless claims data from the Labor Department and May's Philadelphia Federal Reserve manufacturing index will both be published at 1330 BST, while the Conference Board's April leading index and last month's existing-home sales data will follow at 1500 BST.

Reporting by Iain Gilbert at Sharecast.com