U.S. stock futures were looking for direction Monday as worries about Fed rate rises persisted, with major indexes trading not far off their 2022 lows set at the end of last month.
Investors were looking ahead to key inflation data due later this week, as well as minutes of the Fed’s September policy meeting and the start of earnings season.
How stocks are trading
-
S&P 500 futures
ES00,
+0.36%
erased earlier losses to tick up 3.50 points, or 0.1%, to 3,656.75. -
Dow Jones Industrial Average futures
YM00,
+0.45%
rose 63 points, or 0.2%, to 29,416. -
Nasdaq 100 futures
NQ00,
+0.26%
were down 9.50 points, or 0.1%, at 11,092.
On Friday, the Dow Jones Industrial Average
DJIA,
fell 630 points, or 2.1%, the S&P 500
SPX,
declined 2.8%, and the Nasdaq Composite
COMP,
dropped 3.8%. The Nasdaq Composite was down 31.9% for the year to date through Friday.
What’s driving markets
U.S. stocks were in line for a fourth consecutive session of losses as concerns about additional interest rate rises by the Federal Reserve continued to dampen sentiment.
Trading was expected to be somewhat thinned by the Columbus Day and Indigenous People’s Day holiday, which closed the Treasury market.
Soft data a week ago raised hopes that the Fed would soon pause its monetary tightening cycle in its battle to suppress multi-decade high inflation, and the market subsequently rebounded off its near two-year lows. But a strong jobs report on Friday crushed that Fed “pivot” narrative and stocks plunged again.
The 5-day round trip saw an average move for the S&P 500 of 1.9%. Little surprise then that the CBOE Vix index
VIX,
a gauge of expected S&P 500 volatility, sat on Monday at 31.4, more than 50% above its long term average of 20.
“The market response to Friday’s U.S. jobs report was characteristic of a bear market in equities. U.S. indices reversed sharply in the absence of the bad economic news required to shake the Fed’s hawkish determination,” said Ian Williams, strategist at Peel Hunt.
Now traders will look toward more data due later in the week for further guidance on Fed thinking and equity valuations.
The U.S. producer price numbers will be released on Wednesday and the consumer prices report on Thursday, the last of their kind before the Fed’s rate-setting meeting on Nov. 2.
Then on Friday, third-quarter corporate earnings season really kicks into gear when big banks like JPMorgan
JPM,
and Citigroup
C,
present their numbers.
Read: JPMorgan, Citi, Morgan Stanley and Wells Fargo kick off bank earnings season in choppy waters
“The estimated earnings growth rate for the S&P 500 is 2.4%. If 2.4% is the actual
growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q3 2020 (-5.7%),” said John Butters, senior earnings analyst at Factset.
Further hurting risk appetite on Monday was additional gains for the dollar, whose strength is considered a drag on the earnings of U.S. multinationals. The dollar index
DXY,
rose 0.3% to 113.15 as the euro broke back below $0.97 after Russia sent missiles into cities across Ukraine.
Companies in focus
-
Rivian Automotive Inc.
RIVN,
-7.64%
intends to recall about 13,000 vehicles due to a possible safety issue that has so far been found to have impacted several units, the company said Friday night. Shares were down 7.1% in premarket trade. -
Tesla Inc.
TSLA,
-6.32%
reported record monthly sales of China-made electric vehicles in September, as it continues to ramp production in the world’s number-two economy. The electric-vehicle maker delivered 83,135 EVs in September, an 8% rise from August, according to a report by the China Passenger Car Association on Sunday. Tesla shares were down 0.2%.
