NASDAQ 100, Dow Jones, S&P 500: Futures Slide as Investors Brace for Inflation Data, Earnings Season

Highlights

• Stock futures decline ahead of inflation data and earnings season.
• Wall Street experienced a losing week, with S&P 500, Nasdaq, and Dow Jones falling.
• Concerns arise over S&P 500 earnings and potential earnings recession.

Overview

At 09:51 GMT, Dow futures are trading 33923.00, down 14.00 or -0.04%. S&P 500 Index futures are at 4424.75, down 9.25 or -0.21% and Nasdaq Composite futures are trading 15126.50, down 55.25 or -0.36%.

Federal Reserve’s Rate Hike Dilemma

Last month, the Federal Reserve decided to skip a rate hike at its June meeting. However, slightly stronger-than-expected wage growth in June raised concerns about the potential for more rate hikes in the future. Investors will closely monitor the latest comments from Federal Reserve officials this week for hints about the central bank’s next interest rate policy moves.

Finance Giants Set to Report Earnings

Wall Street experienced a losing week, with the S&P 500 pulling back 1.16% and the Nasdaq Composite and Dow Jones Industrial Average falling 0.92% and 1.96%, respectively. The upcoming earnings reports from finance giants BlackRock, JPMorgan Chase, Wells Fargo, and Citi will kick off the second-quarter earnings season.

Earnings Expected to Be Shaky

Despite the recent economic challenges, there are concerns about S&P 500 earnings facing significant pressure for the remainder of the year, potentially entering an earnings recession. Negative operating leverage, where cost growth exceeds sales growth, is expected to impact earnings growth significantly.

Alibaba Jumps 5% Overnight

Alibaba’s Hong Kong-listed shares rose up to 5% on Monday morning. This indicates optimism regarding the end of scrutiny on its financial arm, Ant Group. Chinese regulators imposed a 7.12 billion yuan ($985 million) fine on Ant Group, marking the conclusion of Beijing’s two-year clampdown on domestic tech companies. Regulators confirmed that most outstanding issues related to platform companies’ financial businesses have been resolved. This signals “normalized supervision” for the domestic tech industry.

All Eyes on US Consumer Inflation

As the week progresses, investors will closely watch the inflation data, earnings reports, and the remarks of Federal Reserve officials for indications of future market trends. The possibility of further rate hikes by the Federal Reserve remains on the table, contributing to market uncertainties.