Traders work on the floor of the New York Stock Exchange.
U.S. stock index futures were flat overnight Sunday after the Nasdaq Composite Index posted its worst month since 2008, under pressure from rising rates, runaway inflation and disappointing earnings from some of the biggest technology companies.
Futures contracts linked to the Dow Jones Industrial Average slipped 11 points. S&P 500 futures were flat, while Nasdaq 100 futures fell 0.2%.
Major averages fell on Friday, accelerating April’s losses. The Dow Jones lost 939 points during the session, bringing its loss last week to around 2.5%. It was the fifth consecutive negative week for the benchmark 30-stock index.
The S&P 500 fell 3.63% on Friday, its worst day since June 2020, and posted its fourth consecutive negative week for the first time since September 2020. The Nasdaq also recorded a fourth consecutive week of losses, after falling 4.2% on Friday. . Both indices recorded their lowest closing levels for the year.
“It’s become a classic market for traders as spikes in volatility and increasingly bearish headlines reverberate,” said Quincy Krosby, chief equity strategist for LPL Financial.
The Dow Jones and S&P 500 just had their worst month since March 2020, when the pandemic took hold. The Dow Jones ended April down 4.9%, while the S&P fell 8.8%.
The selloff was even more extreme in the tech-heavy Nasdaq Composite, which plunged 13.26% in April, its worst month since October 2008. The steep decline followed underperformance by big tech companies, including Amazon, Netflix and Meta Platforms.
“[D]Disappointing guidance from tech giants Amazon and Apple has heightened fears that a decidedly more hawkish Fed, coupled with still unresolved supply chain issues, and rising energy prices will make the economy more elusive. hope for a ‘soft landing’ from the Fed,” Krosby said.
Netflix is down 49% over the past month, with Amazon and Meta losing 24% and 10.8% respectively. Tech stocks have been particularly hard hit since their often lofty valuations and promise of future growth are starting to look less attractive in a rising rate environment.
Investors are eagerly awaiting Wednesday when the Federal Open Market Committee releases a statement on monetary policy. The decision will be released at 2 p.m. ET, with Federal Reserve Chairman Jerome Powell holding a press conference at 2:30 p.m.
“Investors are worried about mounting cost pressures and uncertain prospects from the biggest names in tech … and investors are unlikely to be comfortable anytime soon with the Fed widely expected to deliver a 50 basis point hike with a hawkish message next week,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
Another key economic indicator will come on Friday when the April jobs report is released.
Earnings season is now more than halfway through, but a number of companies are expected to report results over the coming week, including a host of consumer-focused restaurant 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 and 73% have exceeded revenue expectations, according to Refinitiv data.