Stock futures are flat as investors await economic data, earnings
U.S. stock market futures were unaffected in overnight trading Monday after major averages began the week with. muted movesInvestors reacted positively to a rise in yields.
Dow Jones Industrial Average futures gained 18 points. S&P 500 futures were up 0.03%, while Nasdaq 100 futures added 0.04%.
For its fourth session of negative trading in five sessions, the Dow lost 13 points (0.04%) during normal trading. About 136 points were gained by the 30-stock index at its highest point of the day. The S&P 500 finished the day unchanged at 4,682.87. The benchmark index fluctuated between gains or losses over the day, with one point seeing a 0.3% gain and another trading at 0.21% less. The Nasdaq Composite fell 0.04%. Russell 2000, which fell 0.45% was the least performer.
As interest rates rose, stocks moved in tandem with them. The yield on the 10-year Treasury Note topped 1.622% and the 30-bear Treasury Bond climbed above 2%.
Market fears have been heightened by inflation concerns after the consumer price index saw its highest annual growth in over three decades last month. Paul Christopher, global market strategist at Wells Fargo Investment Institute said that he thinks inflation will slow in 2022 but that the path to lower inflation is clear. [will]Inflation will be higher in the first half of the year.
In a note to clients, he stated that the inflationary drivers will be more persistent than we think. However, the base case for this is that the improvements in transitory elements won’t overshadow the stickier ones.”
Walmart opens a week of busy retail earnings Tuesday, before the market opens. Investors will get a glimpse at what consumers are spending. Target and Home Depot will also report before the market opens. Target’s results will be posted on Wednesday.
On Tuesday, a variety of economic data including retail sales figures for October. Dow Jones economists have found that sales are expected to rise by 1.5% in October, as compared with 0.7% September. A survey of the NAHB’s housing market will be available, along with industrial production figures.
Monday afternoon, President Joe Biden signed $1 trillion bipartisan infrastructure bill into law. It includes funds for transport, broadband, and utilities.
While the major averages may be in their sixth negative week, stocks remain at record high levels. Some Wall Street strategists, such as Michael Wilson from Morgan Stanley, think the outlook is muted.
In a Monday note to clients, he stated that “with financial conditions tightening” and slowing earnings growth, the 12-month risk/reward ratio for broad indices looked unattractive. He added that “strong nominal GDP growth should continue providing plenty of great investment opportunities at stock level for active mangers.” His 12-month base target for the S&P 500 is 4,400, which is 6% below where the index closed on Monday.