Traders work on the floor of the New York Stock Exchange.
U.S. stock index futures rose during Sunday trading after the Nasdaq Composite Index posted its worst month since 2008, pressured by rising rates, rampant inflation and lower-than-expected earnings from some of the biggest tech companies.
Futures linked to the Dow Jones Industrial Average gained 89 points. S&P 500 and Nasdaq 100 futures rose 0.2%.
The major averages sank on Friday, accelerating April’s losses. The Dow sank 939 points during the session, bringing its loss last week to around 2.5%. It was the fifth consecutive 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 week of negative for the first time since September 2020. The Nasdaq also posted a fourth straight week of losses after falling. 4.2% on Friday. . Both indices recorded the lowest levels at the end of the year.
“This has become a classic trader’s market as spikes in volatility and increasingly bearish headlines reverberate,” said Quincy Krosby, chief equity strategist at LPL Financial.
The Dow and S&P 500 are coming off their worst month since March 2020, when the pandemic struck. The Dow ended April down 4.9%, while the S&P fell 8.8%.
The selloff was even more extreme on the tech-heavy Nasdaq Composite, which fell 13.26% in April, its worst month since October 2008. The sharp decline follows the underperformance of big tech companies including Amazon, Netflix and Meta. Platforms.
“[D]Guidance from tech giants Amazon and Apple has exacerbated concern that a decidedly more aggressive Fed, along with still intractable supply chain problems and rising energy prices could make hope for a ‘soft landing’ from the Fed. more illusory,” Krosby said.
Netflix is down 49% last month, with Amazon and Meta losing 24% and 10.8%, respectively. Tech stocks have been particularly hard hit since their often high valuations and the promise of future growth start to look less attractive in an environment of rising rates.
Investors are looking to Wednesday, when the Federal Open Market Committee will issue a monetary policy statement. The decision will be released at 2:00 pm ET, with Federal Reserve Chair Jerome Powell holding a press conference at 2:30 pm.
“Increasing cost pressures and uncertain prospects from the biggest tech names have investors jittery… and investors are unlikely to be comfortable anytime soon with the general expectation that the Fed will deliver a 50 basis point increase along with a hawkish message next week”. said Charlie Ripley, senior investment strategist at Allianz Investment Management.
Another important economic indicator will come on Friday when the April jobs report is released.
Earnings season is now halfway through, but several companies are expected to report results next week, including a number of consumer-focused restaurants and travel companies.
Expedia, MGM Resorts, Pfizer, Airbnb, Starbucks, Lyft, Marriott, Yum Brands, Uber eBay and TripAdvisor are just a few of the names on deck.
Of the 275 S&P 500 companies that have reported earnings so far, 80% have exceeded earnings estimates, with 73% beating revenue expectations, according to Refinitiv data.