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S&P 500 Futures Drop Before Earnings Season Begins

Trader on the NYSE, June 24, 2022.

Source: NYSE

U.S. stock futures fell on Sunday night as Wall Street reviewed major corporate earnings reports and key inflation data, following a strong jobs report.

Futures contracts tied to the Dow Jones Industrial Average fell 51 points, or 0.1%. S&P 500 futures fell 0.2 percent and Nasdaq 100 futures lost 0.4 percent.

On Friday, the Dow and S&P ended trading slightly lower, while the Nasdaq Composite increase for the fifth day in a row. All major averages guarantee a winning week after Stronger than expected jobs report Friday showed that the recession that worries investors is yet to come and adds to the positive sentiment.

Treasury yields jumped, with 2-year Treasury yields higher than 10-year yields, an inversion that many see as an indicator of a recession.

“While markets ended in a solid green for the week, investors should brace for continued volatility in July, with continued uncertainties looming regarding inflation, policy Fed, recession fears, protracted Russia-Ukraine war, all as we also move into business, said Greg Bassuk, managing director at AXS Investments.

The jobs report, while good for the economy, could prompt the Federal Reserve to keep raising interest rates aggressively in the coming months to combat persistently high inflation. It will be checked this week with a bunch of big bank earnings and consumer inflation data this week.

“With recession fears weighing on the market, investors are focusing too much on corporate earnings for bigger clues about the health of U.S. businesses and the economy,” Bassuk said. the broader US economy,” Bassuk said.

A sharper lens will be needed to analyze these earnings reports, he added, as a strong second quarter could be accompanied by very cautious outlooks. “When the cost of goods and other producers remains high, companies will factor in the extent to which that inflated price can be passed on to consumers and likewise, how to maintain strong earnings amid economic, geopolitical and other key constraints.

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PepsiCo and Delta Air Lines are expected to report earnings on Tuesday and Wednesday. JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup are expected to report later in the week.

Investors are also looking at key inflation data this week. The June Consumer Price Index is due out on Wednesday and is expected to show key inflation, including food and energy, up above the 8.6% level of May.

“Investors expect more aggressive Fed rate hike actions, unless inflation data shows an excessively bearish price level, balanced by concerns that excessive rate hikes have a negative impact on the economy,” Bassuk said. could send the US into recession territory,” Bassuk said.

The June producer price index is due on Thursday and the University of Michigan’s consumer sentiment report for July is due on Friday.

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