Traders work on the floor of the New York Stock Exchange.
New York Stock Exchange
US stock index futures rose during overnight trading on Sunday after the Nasdaq Composite Index posted its worst month since 2008, pressured by rising inflation, rampant inflation and weak earnings from some of the biggest technology companies.
Futures related to the Dow Jones Industrial Average gained 89 points. S&P 500 and Nasdaq 100 futures rose 0.2%.
The major averages sank on Friday, accelerating April’s losses. The Dow fell 939 points during the session, bringing its loss last week to nearly 2.5%. This was the fifth consecutive negative week for the 30-share benchmark.
The S&P 500 fell 3.63% on Friday, its worst day since June 2022, and recorded its fourth consecutive negative week for the first time since September 2020. The Nasdaq also recorded its fourth consecutive week of losses, after falling 4.2% on Friday. . Both indices recorded their lowest closing levels during the year.
“This has become a traditional trading market where sudden volatility and increased bearish headlines reverberate,” said Quincy Crosby, chief equity strategist at LBL Financial.
The Dow and S&P 500 indexes are emerging from their worst month since March 2020, when the pandemic spread. The Dow finished 4.9% lower in April, while the S&P 500 fell 8.8%.
The selling was sharpest in the high-tech Nasdaq Composite, which fell 13.26% in April, its worst month since October 2008. The sharp drop followed poor performance by major tech companies, including Amazon, Netflix and Meta Platforms. .
“[D]Disappointing guidance from tech giants Amazon and Apple has exacerbated fears that a tighter Fed, along with still intractable supply chain problems, and rising energy prices could make hope of a “soft landing” from the Fed out of reach,” Crosby said.
Netflix is down 49% from last month, with Amazon and Meta losing 24% and 10.8%, respectively. Tech stocks have been hit particularly hard because their often high valuations and promise of future growth are starting to look less attractive in a rising rate environment.
Investors are looking forward to Wednesday, when the Federal Open Market Committee will release a statement on monetary policy. The decision will be released at 2 p.m. ET, with Federal Reserve Chairman Jerome Powell holding a press conference at 2:30 p.m.
“Increasing cost pressures and uncertain prospects from the biggest tech names have irritated investors… Investors are unlikely to be comfortable any time soon as the Fed is widely expected to deliver a 50 basis point increase along with an upbeat message next week,” said Charlie Ripley, chief investment analyst at Allianz Investment Management.
Another major economic indicator will be released on Friday when the jobs report for April is released.
Earnings season is now more than halfway over, but a number of companies are due to publish their results next week, including a group of consumer-focused restaurant and travel companies.
Expedia, MGM Resorts, Pfizer, Airbnb, Starbucks, Lyft, Marriott, Yum Brands, Uber eBay, and TripAdvisor are some of the names on deck.
Of the 275 Standard & Poor’s 500 companies that have reported earnings so far, 80% have beat earnings estimates with 73% beating revenue expectations, according to Refinitiv data.