Contracts on the S&P 500 went lower, erasing gains overnight. Dow and Nasdaq futures also dipped in the red mark before the opening bell. US crude oil prices fell above $101 a barrel, and the benchmark 10-year Treasury yield is above 2.9%, or close to its highest level since December 2018.
Investors are gearing up for more potentially market-driven events this week after volatility in April trading. The S&P 500 fell 8.8% in April due to its worst monthly performance since March 2020. Tech stocks were particularly battered, and the Nasdaq Composite fell 13% last month for its worst performance since October 2008.
The Federal Reserve’s next monetary policy-setting meeting will be watched especially closely in the coming days, with the central bank set to release its latest policy statement and hold a press conference with Fed Chair Jerome Powell on Wednesday afternoon. Market participants expect the Fed to raise rates by 50 basis points at the end of this meeting, marking the first rate hike of that magnitude since 2000. It will follow the 25 basis-point rate hike the Fed made in March, bringing the target. Raise the federal funds rate between 0.25% and 0.50% and the lower end of the range to zero for the first time since March 2020.
The Fed is also expected to formally announce that it will begin a quantitative tightening, or weaning off rolling assets, from its $9 trillion balance sheet. Central scooped up assets and added to its balance sheet during the pandemic as another means to help support the virus-stricken economy. However, expectations of this construction being undone have increased volatility once the market has become accustomed to these easy money policies.
And with US GDP growth turning negative in the first quarter of this year for the first time since mid-2020, some pundits have begun to question whether the Fed will be able to tighten monetary policies without a deeper slump in economic activity. would be able.
“The risk of a recession has increased, and the financial health of the private sector may ultimately determine whether policy tightening will propel the economy into recession,” Goldman Sachs chief economist Jan Hetzius wrote in a note on Sunday. “Financial fragility in the private sector has historically exacerbated the effects of the adverse conditions facing expansion today: high interest rates, rapid wage inflation, and slow growth.”
Meanwhile, earnings season will also take a toll on this week, with everything from Airbnb (ABNB) to Uber (UBER) and Lyft (LYFT) and Block Inc. (SQ) up to several closely watched companies will each be reporting results. In this week, 55% of S&P 500 constituents reported actual first-quarter results, according to data from FactSet, and 80% of these topped earnings per share estimates, while 72% exceeded revenue expectations.
FactSet noted that the expected earnings growth rate for S&P 500 companies has also now risen to 7.1%, up from the 4.7% seen at the end of March. Nevertheless, if the real earnings growth rate for the index remains at 7.1% in the first quarter, it would mark the slowest rate since the fourth quarter of 2020.
7:43 am ET Monday: Key stock futures to open higher
Here’s what the markets were trading on Monday morning before opening:
S&P 500 Futures (n = f,: +7.5 marks (+0.18%) to 4,135.00
Dow Futures (ym = f,: +89 marks (+0.27%) to 32,971.00
Nasdaq Futures (NQ = F, +27.75 marks (+0.22%) to 12,879.75
raw (CL = F,: -$2.95 (-2.82%) to $101.74 per barrel
Sleep (gc = f,:-$32.40 (-1.69%) to $1,879.30 per ounce
10 year treasury (^tnx,: +3.5 bps for 2.92% yield
Emily McCormick is a reporter for Yahoo Finance. follow him on twitter,
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