U.S stock futures traded lower on Monday, with equities resuming a downward slide as concerns over the growth outlook persisted amid elevated inflation.
Contracts on the S&P 500 fell by 0.3% ahead of the opening bell. Nasdaq futures dropped by 0.5% as tech companies like Apple and Amazon AMZN each headed for lower openings. The Dow Jones Industrial Average contracts traded little changed to slightly lower.
U.S. crude oil prices CL F declined for the first time in four sessions after new economic data from China came in weaker than expected, as the latest wave of restrictions on mobility curbed by the country. In April of last year, China's retail sales dropped by 11.1%, marking the worst decline since March 2020, while industrial production dropped by 2.9% compared to the same month last year.
The move lower in risk assets extended a stretch of volatility across markets on Monday. Stocks closed out last week with a sixth consecutive loss, bringing the S&P 500 to a 16.1% drop from Jan. 3. This has come because investors weighed the risks of a deeper economic downturn as the Federal ReserveFederal Reserve looks to curb inflation running near its hottest level in four decades, geopolitical turmoil continues in Ukraine, and China grapples with its largest COVID outbreak since 2020.
Wall Street analysts have a cautious tone on stocks because of these concerns. In a new note, Goldman Sachs slashed its year-end price target on the S&P 500 to 4,300 from 4,700. David Kostin, Goldman Sachs' chief U.S. equity strategist, said that the lowered target reflects higher interest rates and slower economic growth than previously assumed. The S&P 500 would likely fall to 3,600 in a recession scenario, according to Kostin.
Other strategists cautioned against reading too much into one-day bounces, because they highlighted the plethora of current risks to equities.
At this moment, we think the turning point is an open question. Eric Freedman, the U.S. Bank Asset Management chief investment officer, told Yahoo Finance Live that we are likely between two repricings: Repricing one is Federal Reserve-induced repricing, Eric Freedman, U.S. Bank Asset Management chief investment officer. Every asset class has to move down in price and up in yield when the Fed says they're going to raise rates. We're really in the middle of that. There could be a turning point there, depending on what the Fed decides to do in terms of communications. The risk of potential more downside is the next repricing if we start to see higher commodity costs as well as higher borrowing costs trickle into the real economy and stay there for some time, he said. We think we are in a deeply oversold condition, but we would still be cautious because we think there's more potential downside ahead. Here's where markets were trading ahead of the opening bell Monday morning:
Emily McCormick is a reporter for Yahoo Finance.