Dow futures fall 170 points to start week with key inflation data, gains ahead

Traders on the floor of the New York Stock Exchange.

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Equity futures are lower on Sunday night as markets come out of a tumultuous week and traders look ahead to key reports coming next week that may offer insight into the health of the economy.

Futures linked to the Dow Jones Industrial Average fell 0.6% to 29,175 points. S&P 500 futures fell 0.7% to 3,626.25 points, while Nasdaq 100 futures fell 0.8% to 11,014.25 points.

Market observers generally view the coming week as the kickoff of the earnings season, with four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi – reporting on Friday. PepsiCo, Delta and Domino’s are also among the companies reporting next week.

Inflation will also take center stage as new monthly consumer price indices are released Thursday morning.

This is followed by a week of whiplash for market parties. The first half brought a relief rally that sent the S&P 500 soaring more than 5% in its biggest two-day gain since 2020.

But jobs data that economists say will keep the Federal Reserve on track to continue raising interest rates, and OPEC+’s decision to cut oil supply, have confused investors, diluting earnings later in the week. When day trading ended Friday, the S&P was 1.5% higher than where it started the week. The Dow and Nasdaq rose 1.5% and 0.7% respectively.

Still, the Dow, S&P 500 and Nasdaq had the first positive week of the last four. So far, all remain significantly lower in 2022, and the Nasdaq is less than 1% from its 52-week low.

Meanwhile, the 2-year government bond yield rose 6 basis points and ended at 4.316%. One basis point corresponds to 0.01%.

“The stock market will likely be lower because either the economy and corporate earnings will slow significantly or the Fed will have to raise interest rates even higher and keep them higher for longer,” said Chris Zaccarelli, investment chief. officer at Independent Advisor Alliance, on Friday.

“Given the conditions under which we operate, we think it would be wise to prepare for a recession,” he added. “The talk of a superficial recession that is now the story-du-jour seems uncannily similar to last year’s ‘inflation is transient’ story.”

Last week raised concerns that corporate profits will show the ugly side of a rising dollar as Levi Strauss was the last to cut guidance amid declining international sales.

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