Stock futures were lower on Monday morning as markets emerge from a turbulent week and traders look ahead to key reports due next week that could provide insight into the health of the economy.
Futures linked to Dow Jones Industrial Average racked up 28 points. S&P 500 futures were lower by 0.18%, while Nasdaq 100 futures fell 0.30%.
Market observers generally regard the coming week as the kick-off to earnings season, with four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi – reporting on Friday. PepsiCo, Participate and Domino’s is also among companies reporting next week.
Inflation will also take center stage as new monthly data for the consumer price index arrives on Thursday morning.
A week of whiplash for market participants will follow. 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 that economists say will keep the Federal Reserve on a path to continue raising interest rates and OPEC+’s decision to cut oil supplies rattled investors, knocking the market down 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 percent and 0.7 percent respectively.
Still, the Dow, S&P 500 and Nasdaq had the first positive week in the last four. All remain significantly down so far in 2022, and the Nasdaq is less than 1% off a 52-week low.
“The direction of the stock market is likely to be lower because either the economy and corporate profits are going to slow meaningfully or the Fed will have to raise interest rates even higher and keep them higher longer,” said Chris Zaccarelli, chief investment officer. officer of the Independent Advisor Alliance, Friday.
“Given the conditions in 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 heightened concerns 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.