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Stock futures rise to start the week

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, on December 7, 2022.

Brendan McDermid | Reuters

Stock futures rose on Monday after the major averages posted their second straight week of losses for the first time since September. Investors also struggled to shake off fears of a recession.

Futures tied to the Dow Jones Industrial Average gained 79 points, or 0.23%, while S&P 500 and Nasdaq 1[ads1]00 futures rose 0.34% and 0.44%, respectively.

The moves followed another down week for stocks after the Federal Reserve delivered a short-term rate hike of 50 basis points and signaled higher-for-longer interest rates. Recession fears rose as the central bank raised its forecast for future increases above previous expectations, saying it now expects to raise interest rates to 5.1%.

Equities are set to round off a dismal monthly performance in December. On Friday, the Dow fell 281.76 points, or 0.85%. The 30-share index fell 1.66% for the week, bringing its monthly losses to 4.83%. The S&P 500 fell 1.11% and fell 2.08% for the week, extending its monthly decline to 5.58%. The Nasdaq Composite fell 0.97% on Friday and 2.72% for the week. That’s down 6.65% this month.

“Monetary policy has quickly become restrictive now that the Fed has raised interest rates by 400 basis points in 9 months,” Ed Moya, senior market strategist at Oanda wrote in a note to a client on Friday. “The recession risk will only grow now that [Fed chair Jerome Powell] has signaled that we should expect “ongoing increases.”

The National Association of Home Builders’ survey, which measures monthly sentiment, is out Monday.

Investors will also be watching for a few earnings reports due later in the week. FedEx and Nike are both scheduled to report earnings results on Tuesday after the market closes. As fears of the recession increase, earnings results will become more of a focus.

“Rates and inflation may have peaked, but we see that as a warning sign for profitability, a reality we believe remains undervalued but can no longer be ignored,” Michael Wilson, equity analyst at Morgan Stanley, wrote in a Monday note.

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