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Stock futures are flat after S&P, Nasdaq start the week in the red

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Traders are seen working on the New York Stock Exchange’s floor in New York City (USA), May 13-2022. 

Brendan Mcdermid | Reuters

U.S. stock index futures were flat during overnight trading on Monday, following a volatile session that saw the S&P 500 and Nasdaq Composite continue their march lower.

Futures contracts linked to the Dow Jones Industrial Average fell 26 points. S&P 500 futures were down 0.8%, while Nasdaq 100 futures were flat.

During regular trading the S&P dipped 0.39%. The S&P lost 0.39% in volatile sessions. At one point, the benchmark index had gained 0.56% while losing about 1% at session’s low.

Although the Dow Jones Industrial Average experienced a similar swing at closing, the 30-stock Dow Jones index saw 0.8% more. This was due to Chevron’s and UnitedHealth pushing it higher.

In the meantime, the Nasdaq composite was the session’s weakest performer, as tech stocks continue to wreak havoc. This tech-heavy index was 1.2% lower than its intraday record from Nov. 22, and 28% less than it is today.

UBS Monday said in a note that the “poor performance” of tech companies and growth firms this year is part of the payback for recent impressive returns.

The tailwinds of the pandemic — a jump in stay-at-home spending and low interest rates — have since turned to headwinds. Consumer spending has begun to shift and interest rates are increasing.

UBS stated that growth stocks, while more expensive than value stocks, are not as high-end as long-term rates of interest.

Investors will also pay attention to key economic data Tuesday morning, including retail sales numbers at 8:30 am. ET, followed later that morning by data on industrial production.

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Stocks have faced increasing pressure from inflation concerns, and some investors are concerned that the economy will eventually fall into recession.

In a Monday note, Darrell Cronk (president of Wells Fargo Investment Institute) stated that “we see clear indicators of late-cycle economic growth, and although the risk of either contraction or recession having risen steadily over the first four and a half months of the year, now we are beginning to cross a probability threshold that makes recession an base case for both the end of the year and the beginning of the next.”

It should result in a relative mild contraction of economic growth and be short-lived, the firm stated.

The bulk of earnings season has passed, but a few companies, such as Walmart, Home Depot, and JD.com, are still on Tuesday.

As of Friday afternoon, of the more than 90% of the S&P 500 that’s posted quarterly results, 78% of companies have beat earnings expectations while 75% have topped revenue forecasts, according to data from Refinitiv.

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