Dow futures fall 170 points to start week with key

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

Traders on the floor of the New York Stock Exchange.

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Stock futures are lower Sunday night as the markets come out of a tumultuous week and traders look ahead to key reports coming in the next week that can offer insights into the health of the economy.

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

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

Inflation will also take center stage as new monthly Consumer Price Index data comes Thursday morning.

It will follow a week of whiplash for market participants. The first half brought a relief rally that pushed the S&P 500 up more than 5% in its largest two-day gain since 2020.

But jobs data that economists say will keep the Federal Reserve on a path to continue raising interest rates and OPEC+’s decision to slash oil supply rattled investors, diluting wins later in the week. When day trading ended Friday, the S&P was up 1.5% compared to where it started the week. The Dow and Nasdaq were up 1.5% and 0.7%, respectively.

Still, the Dow, S&P 500 and Nasdaq had the first positive week in the last four. All remain down substantially so far in 2022, however, and the Nasdaq is less than 1% away from its 52-week low.

Meanwhile, the 2-year Treasury yield rose 6 basis points, closing at 4.316%. One basis point is equivalent to 0.01%.

“The direction of the stock market is likely to be lower because either the economy and corporate profits are going to slow meaningfully or the Fed is going to have to raise rates even higher and keep them higher for longer,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, on Friday.

“Given the conditions that we are operating under, we believe it’s prudent to begin preparing for a recession,” he added. “The talk of a shallow recession that is now the narrative-du-jour strikes us as eerily similar to the ‘inflation is transitory’ narrative of last year.”

Last week brought heightened concerns that corporate earnings will show the ugly side of a surging dollar as Levi Strauss became the latest to cut guidance due to sliding international sales.

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Services activity in China contracted in September, private survey shows

The Caixin services purchasing managers’ index came in at 49.3 in September, according to a report published Saturday, a steep drop from 55 in August.

The 50-point mark separates growth from contraction. PMI readings compare activity from month to month.

The nation’s Covid curbs caused services activity in China to contract in September for the first time since May, the report said.

“Companies that reported reduced activity frequently commented that the pandemic and subsequent measures to contain the virus had restricted operations and weighed on demand in September,” the press release by Caixin said.

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5 HOURS AGO

Core inflation will rise again, Allianz’s El-Erian predicts

Allianz Chief Economic Adviser Mohamed El-Erian predicts core inflation will continue rising while headline inflation comes down to about 8%.

He told CBS’ “Face The Nation” on Sunday that inflation core inflation will eventually come down. But he expects new Consumer Price Index data coming Thursday to show it rose again month over month.

Core inflation previously rose 0.6% from July to August – the most recent data before what is coming next week – and was up 6.3% from a year ago.

“The question is, does it come down with a slowdown in the economy or a major recession?” he said.

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The week ahead: Earnings season kicks off, new data and more

Market observers will be watching for key data and information coming in the coming week.

Four of the world’s largest banks, as well as consumer interest brands like PepsiCo and Domino’s, will report earnings for a week many call the start to the new earnings season.

They will also watch for Consumer Price Index data Thursday morning as concerns over inflation continue to impact the political landscape and economic policy.

New data from the University of Michigan’s Consumer Sentiment Index will drop Friday morning. This index gauges consumer feelings about issues such as the health of the business world and their finances and is considered a key indicator of how average Americans feel about the economy.

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6 HOURS AGO

Stock futures open lower

Stock futures were down at the start of after-hours trading Sunday night.

Futures connected to the Dow Jones Industrial Average shed 0.3% to 29,225 points.

Both the S&P 500 and Nasdaq 100 saw futures down 0.4% to 3,638 points and 11,056.75 points, respectively.

— Alex Harring