Futures fall to start the week with key inflation numbers, earnings ahead

Traders on the floor of the New York Stock Exchange.

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Stock futures were lower on Monday morning as markets recover from a tumultuous week and traders look ahead to key reports coming next week that could provide insight into the health of the economy.

Futures associated with Dow Jones Industrial Average fell 0.3% or 75 points. S&P 500 futures fell 0.4%, while Nasdaq 100 futures fell 0.5%.

Market watchers generally view the coming week as the kickoff to earnings season, with four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi – reporting Friday. PepsiCo, Participate and Domino’s are also among companies reporting next week.

Inflation will also take center stage as new monthly consumer price index data arrives Thursday morning.

It will follow a week of whiplash for market participants. The first half of the week brought a relief rally that pushed the S&P 500 up more than 5% in its biggest two-day gain since 2020.

But jobs data, economists say, will keeping the Federal Reserve on track to continue raising interest rates and OPEC+’s decision to cut oil supply rattled investors and tumbled the market later in the week. By the end of trading on Friday, the S&P was up 1.5% from where it started the week. The Dow and Nasdaq rose 1.5% and 0.7%, respectively.

Yet the Dow, S&P 500 and Nasdaq had the first positive week in the last four. However, all remain significantly down so far in 2022, and the Nasdaq is less than 1% off its 52-week low.

“The direction of the stock market is likely to be lower because either the economy and corporate profits will slow meaningfully, or the Fed will have to raise interest rates even higher and keep them higher for longer,” said Chris Zaccarelli, chief investment officer. officer at Independent Advisor Alliance, Friday.

“Given the conditions under which we operate, we believe it is prudent to begin preparing for a recession,” he added. “The talk of a shallow recession that is now the narrative-du-jour strikes us as eerily similar to the ‘inflation is temporary’ narrative from last year.”

Last week brought increased concern that corporate earnings will show the ugly side of a rising dollar as Levi Strauss became the latest to cut guidance due to sliding international sales.

The bond market is closed Monday for Columbus Day.

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