Futures fall to start week with key inflation data, 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 come off a turbulent week and traders look ahead to key reports next week that may provide insight into the health of the economy.

Futures associated with the Dow Jones industry average slipped 0.44% or 130 points. S&P500 Futures fell 0.51%, while Nasdaq 100 futures fell 0.52%.

Market watchers generally view the coming week as the start of earnings season, with four of the world’s largest banks – JP Morgan, Wells Fargo, MorganStanley and city – Reporting on Friday. PepsiCo, delta and dominoes are also among the companies reporting next week.

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Inflation will also take center stage as fresh monthly consumer price index data is released Thursday morning.

A week of whiplash follows for market participants. The first half saw a recovery rally that propelled the S&P 500 more than 5% for its biggest two-day gain since 2020.

But jobs data, which economists say will keep the Federal Reserve on track to raise interest rates further, and OPEC+’s decision to cut oil supplies unsettled investors and diluted gains later in the week. As day trading ended on Friday, the S&P was up 1.5% compared to where it started the week. The Dow and Nasdaq rose 1.5% and 0.7%, respectively.

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Still, the Dow, S&P 500 and Nasdaq had the first positive week in the last four. So far, however, all remain well into the red in 2022, and the Nasdaq is less than 1% off its 52-week low.

Meanwhile the 2-year Treasury yield rose 6 basis points to close at 4.316%. One basis point equals 0.01%.

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

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“Given the conditions in which we operate, we think it would be prudent to prepare for a recession,” he added. “The talk of a shallow recession, which is now the narrative of the day, strikes us as eerily similar to last year’s ‘inflation is fleeting’ narrative.”

Last week brought heightened concerns that corporate earnings could show the ugly side of a rising dollar Levi Strauss was the last to lower the forecast due to falling international sales.

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