Traders work on the floor of the New York Stock Exchange.
US stock index futures were flat during overnight trading on Sunday after the Nasdaq Composite Index posted its worst month since 2008, pressured by rising rates, runaway inflation and disappointing earnings from some. of the largest technology companies.
Futures contracts linked to the Dow Jones Industrial Average fell 11 points. S&P 500 futures were flat while Nasdaq 100 futures fell 0.2%.
The major averages sank on Friday, accelerating April’s losses. The Dow Jones sank 939 points during the session, bringing its loss from last week to about 2.5%. It was the fifth straight negative week for the 30-stock benchmark.
The S&P 500 fell 3.63% on Friday, its worst day since June 2022, and posted its fourth straight negative week for the first time since September 2020. The Nasdaq also posted a fourth straight week of losses, after falling a 4.2% on Friday. . Both indices posted their lowest closing levels for the year.
“This has become a classic traders’ market as volatility spikes and increasingly bearish headlines resonate,” said Quincy Krosby, chief equity strategist at LPL Financial.
The Dow Jones and S&P 500 are coming off their worst month since March 2020, when the pandemic hit. The Dow ended April down 4.9%, while the S&P sank 8.8%.
The sell-off was even more extreme on the tech-heavy Nasdaq Composite, which plunged 13.26% in April, its worst month since October 2008. The sharp drop follows underperformance by big tech companies including Amazon, Netflix and Meta Platforms.
“[D]This guidance from tech giants Amazon and Apple has exacerbated concerns that a decidedly more aggressive Fed, coupled with still-intractable supply chain problems and rising energy prices, may cause hopes of a ‘hard landing’. soft’ from the Fed more elusive,” Krosby said.
Netflix is down 49% over the past month, with Amazon and Meta losing 24% and 10.8%, respectively. Tech stocks have been particularly hard hit since their often lofty valuations and promise of future growth start to look less attractive in a rising rate environment.
Investors look forward to Wednesday, when the Federal Open Market Committee issues a statement on monetary policy. The decision will be announced at 2 p.m.
“Increasing cost pressures and uncertain prospects from the biggest tech names have rattled investors…and investors are likely to be uncomfortable in the near term with the widespread expectation that the Fed will deliver a hike. of 50 basis points along with an aggressive message next week”. said Charlie Ripley, senior investment strategist at Allianz Investment Management.
Another key economic indicator will come on Friday when the April jobs report is released.
Earnings season is now more than halfway through, but a number of companies will post results next week, including a host of consumer-focused travel and restaurant companies.
Expedia, MGM Resorts, Pfizer, Airbnb, Starbucks, Lyft, Marriott, Yum Brands, Uber eBay, and TripAdvisor are just a few of the names available.
Of the 275 S&P 500 companies that have reported earnings so far, 80% beat earnings estimates and 73% beat revenue expectations, according to Refinitiv data.