Stock futures fall ahead of earnings week, traders brace for earnings
On the floor of the NYSE in New York, Traders work on the floor.
The stock index futures fell on Monday, bracing for the start of the earnings season, which could see profits come under pressure because of fears of an economic downturn due to aggressive interest rate hikes.
After a disappointing first half of the year, U.S. stocks started July on an upbeat note, but market participants fear that upcoming quarterly results could trigger another selloff, with earnings falling short of estimates.
The easing of commodity prices and the U.S. Federal ReserveFederal Reserve hinting at a more tempered rate hike were some of the things traders took advantage of last week, but they were choppy last week, and investors took some relief from a softer program of rate hikes amid growing concerns of a global recession.
The three benchmark indexes ended the week higher on Friday, while the Nasdaq posted a gain for the fifth straight session.
The market is largely pricing in a 75 basis-point rate hike later in July, but concerns about the pace of future rate hikes have grown after a stronger than expected jobs report on Friday.
The report, which signaled a still strong labor market, helped alleviate some fears of an immediate recession, but added to concerns about more aggressive monetary policy tightening by the Fed to stamp out soaring inflation.
Big banks such as JPMorgan Chase Co, Citigroup Inc, and Morgan Stanley are due to post earnings later this week, and their results will be parsed for any signs of slowing economic growth. The banks' shares fell between 0.7% and 1.1% in premarket trading.
Investors will be watching consumer prices in the U.S. later this week to gauge the state of inflation and how aggressively the Fed could respond.
The Dow e-minis were down 110 points, or 0.35%, S&P 500 e-minis were down 19.25 points, or 0.49%, and Nasdaq 100 e-minis were down 80.75 points, or 0.66%.
Shares of Twitter Inc fell 6.6% after Elon Musk, chief executive of Tesla, said on Friday he was terminating his deal to buy the social media company.
Las Vegas Sands, Wynn Resorts and Melco Resorts fell between 4.6% and 5.7% after Macau shut down all its casinos for the first time in more than two years in a bid to contain the spread of COVID - 19.