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S&P 500 futures slip after last week’s rebound

S&P 500 futures eased in early trading Tuesday morning as momentum from a strong rebound last week appeared to fade.

Dow Jones Industrial Average futures fell about 165 points, or 0.5%. S&P 500 futures fell 0.4% and Nasdaq 100 futures were little changed.

The US stock market did not open on Monday due to the Memorial Day holiday.

Tuesday’s decisions came amid growing concerns that rising inflation in the United States and around the world could slow economic growth. In Europe, eurozone inflation hit a record high for the seventh consecutive month, jumping 8.1% in May. In the United States, the price index for core personal consumption expenditures – the Fed’s preferred gauge of inflation – rose 4.9% in April from a year ago.

“It will be difficult to reverse fire and ice,” wrote Morgan Stanley’s Mike Wilson. “Higher inflation and slower growth are now the consensus, but that doesn’t mean they’re completely ignored. The higher stock prices rise, the more hawkish the Fed will be.”

Concerns about higher inflation also grew as oil prices surged after the European Union agreed to ban most crude imports from Russia. West Texas Intermediate futures rose about 3% to over $118 a barrel. Brent crude, the global oil benchmark, rose 1.7% to over $123 a barrel.

The Dow Jones and S&P 500 had just posted their best weekly gains since November 2020. The blue chip average closed up 6.2% for the week, ending an eight-week losing streak. The S&P 500 gained 6.5% and the Nasdaq gained 6.8% on the week, ending positive after seven continuous weeks of losses. Strong earnings in the retail sector, along with an inflation report indicating prices could fall, lifted investor sentiment.

Part of last week’s gains came on Friday, when the Dow gained more than 550 points and the S&P 500 jumped 2.5%. The Nasdaq, meanwhile, rebounded 3.3%, boosted by strong reports from tech companies, as well as a drop in the 10-year Treasury yield.

Still, traders continue to deliberate whether the rebound marks a bottom as stocks remain well below their highs. The Dow is 10.1% below its 52-week high, the S&P 500 is down 13.7% and the Nasdaq is down around 25.2%.

“We could get some big equity rallies that won’t be a real turning point for the market,” Strategas investment strategist Ryan Grabinski said in a Friday report. “Building a bear market is a process, and we could still go lower.”

Traders will take a closer look at quarterly corporate earnings in the holiday-shortened week. Salesforce, HP and Victoria’s Secret are expected to report results Tuesday after the bell.

S&P 500 futures slip after last week’s rebound

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