Stock futures fall amid China’s COVID restrictions, packed earnings week

US equities fell on Monday after global equities fell, as concerns about an escalating COVID outbreak in China contributed to unrest over US economic growth in the face of rising inflation and monetary tightening.

The S&P 500 fell by almost 1% just after opening, as the index appeared to increase last week’s losses. The Dow and Nasdaq also fell each. US government interest rates fell, and the 10-year reference rate hovered just over 2.8%.

West Texas’ intermediate crude oil futures fell more than 4% to trade below $ 98 a barrel, with fears of the economic impact of expanded virus-related restrictions growing across China. Beijing saw an increase in COVID cases over the weekend that led to more mandatory tests and some shutdowns in the region. And this came as other populous cities, including Shanghai, have also recently struggled with new waves of infections, even though the country is working to eradicate the virus under a zero-COVID policy.

In a note published last week, Bank of America economist Helen Qiao reduced China̵[ads1]7;s gross domestic product (GDP) growth forecast to 4.2% from 4.8% for 2022 as the number of shutdowns across the country increased.

“Covid-19 barriers and restrictions imposed in Shanghai and neighboring cities not only affect local demand, but also cause logistical breakdowns and widespread supply chain disruptions within and outside the area,” Qiao wrote in the April 19 memo. views, although such control measures will eventually be rolled back and economic activities will gradually normalize by the middle of the year, a heavy burden on growth already seems inevitable. “

Meanwhile, investors have also struggled with claims from Federal Reserve officials last week that the central bank would take a tough stance to curb inflation. Fed Chairman Jerome Powell and San Francisco Fed President Mary Daly were among the last to suggest that they saw the argument for interest rate increases of 50 basis points this year. These larger-than-typical increases will accelerate the Fed’s monetary policy response to inflation in the short term.

“Mr. Powell reiterated the Fed’s focus on high prices and the need for policy to move towards neutral in order to restore price stability. His comments largely confirm market expectations of a 50 basis point increase at the FOMC meeting on May 3-4. which would be the first such move since 2000, “Rubeela Farooqi, chief economist at High Frequency Economics, wrote in a note. Francisco President Daly and Chicago President Evans – said that a few 50 basis point increases are possible this year. “

Although Federal Reserve officials are in a quiet period this week ahead of next week’s central bank meeting, a packed list of corporate results will draw investors’ attention. In the coming days, a number of large companies and stock index components will post results, including Alphabet (GOOGL), Meta Platforms (FB), Apple (AAPL) and Amazon (AMZN).

As of Friday, about one-fifth of the S&P 500 companies had reported their actual results for the first quarter. Of these, 79% topped Wall Street’s earnings estimates, while 69% exceeded sales expectations, according to data from FactSet’s senior revenue analyst John Butters. The expected earnings growth for the index was 6.6% heading into this week, which if implemented through the end of the reporting season will mark the lowest growth rate since the fourth quarter of 2020, Butters noted.

09:31 ET: Shares open lower

Here is where the shares were traded just after opening on Monday morning:

  • S&P 500 (^ GSPC): -38.31 (-0.9%) to 4,233.47

  • Dow (^ DJI): -278.52 (-0.82%) to 33,532.88

  • Nasdaq (^ IXIC): -86.85 (-0.68%) to 12,757.91

  • Rough (CL = F): $ -5.32 (-5.21%) to $ 96.75 per barrel

  • Gold (GC = F): – $ 31.40 (-1.62%) to $ 1,902.90 per ounce

  • 10-year Treasury (^ TNX): -9.8 bps to give 2.808%

07:13 ET: Coca-Cola tops expectations in first quarter

Coca-Cola (KO) reported first-quarter sales and earnings that topped Wall Street’s estimates, with broad growth across the beverage giant’s portfolio of brands that helped lift results.

Adjusted operating income grew by 16% compared to last year, reaching $ 10.5 billion, topping consensus expectations of $ 9.8 billion, according to Bloomberg data. The company-wide unit volume – a closely monitored target for Coca-Cola – increased by 8%, with growth coming mostly from the company’s segment for nutrition, juices, dairy products and plant-based beverages, where the volume of unit cases increased by 12%. On the bottom line, comparable earnings per share reached 64 cents against the expected 58 cents.

For the full year, Coca-Cola said it expects commodity price growth to be in the mid-single percentages. They also expected that the suspension of operations in Russia would have an impact of 1% on the volume of unit cases for the whole year, and an impact of 1–2% on net revenues and operating revenues.

07:06 ET: Stock futures fall, increasing last week’s losses

Here is where the shares were traded Monday morning:

  • S&P 500 futures (NO = F): -36.25 (-0.85%) to 4,231.00

  • Dow futures (ÅM = F): -270 (-0.8%) to 33,458.00

  • Nasdaq futures (NQ = F): -106.75 (-0.8%) to 13,246.75

  • Rough (CL = F): – $ 4.73 (-4.63%) to $ 97.34

  • Gold (GC = F): – $ 23.10 (-1.19%) to $ 1,911.20 per ounce

  • 10-year Treasury (^ TNX): -6.9 bps to give 2.837%

Stock futures fall amid China’s COVID restrictions, packed earnings week

NEW YORK, NEW YORK – MARCH 30: Traders work on the floor of the New York Stock Exchange March 30, 2022 in New York City. US stocks opened low after rising to start the week. (Photo by Michael M. Santiago / Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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