Equity futures are falling, government interest rates are rising as traders await inflation, earnings data

U.S. stocks fell Monday morning as investors looked forward to the start of corporate earnings season this week and a wealth of new economic data as the Federal Reserve prepares to accelerate its measures to counter inflation.

The S&P 500 fell 0.61%, adding to last week’s losses. Nasdaq fell 1% as technology stocks came under renewed pressure. Government interest rates rose and the benchmark 10-year interest rate rose above 2.7% to reach its highest level since January 2019.

Concerns about inflation, rising commodity prices amid Russia’s war in Ukraine and the Federal Reserve’s monetary policy path ahead remained at the center of investor attention. On Tuesday, traders will receive the latest consumer price index from the Bureau of Labor Statistics, which is expected to show a staggering 8.4% year-on-year rise in prices for the biggest jump since 1982. And this comes as Fed officials have increasingly talked about larger than average rate hikes of 50 basis points this year to help bring prices down. Last week, the Fed’s minutes of March also showed that the central bank was preparing to start rolling assets from its $ 9 trillion balance sheet, in a further step that removes support from the financial market and turns away from the pandemic’s accommodating policies.

“If we think about the recent cycles that are comparable, I think of 2018, 2019, when the Fed raised interest rates and ran out of balance. That should sound very familiar,” Seth Carpenter, Morgan Stanley’s global chief economist, told Yahoo. Finance on Friday. “But at the end of 2018, the risk markets started to crack, and the Fed turned the course really fast.”

“The main difference now between the two episodes is that they are trying to pull inflation down. They are not trying to keep it from rising,” he added. “And what that means is that they’re trying to slow down the U.S. economy. They’re trying to slow growth so much that inflationary pressures are falling, but not so much that they’re tipping us into recession. And that’s difficult.”

Meanwhile, the start of the most recent quarterly corporate earnings season this week will help show how individual companies have navigated through inflationary pressures and the ghost of declining economic growth. As of Friday, Wall Street analysts expected S&P 500 earnings to grow by 4.5% for the first quarter compared to last year, according to FactSet data. If realized, this will mark the slowest pace since the fourth quarter of 2020.

“Guidance and management comments will be particularly important sources of information this quarter given the earnings uncertainty going forward,” David Kostin, Goldman Sachs’ top US stock strategist, wrote in a note Monday. “In line with previous quarters, guidance has recently been an important differentiator for stock development.”

9:30 AM: Stocks start the week lower

Here were the main movements in markets from kl. 9:30 ET:

  • S&P 500 (^ GSPC): -28.10 (-0.63%) to 4,460.18

  • Dow (^ DJI): -100.65 (-0.29%) to 34,620.47

  • Nasdaq (^ IXIC): -162.58 (-1.19%) to 13,548.42

  • raw (CL = F): $ -3.74 (-3.81%) to $ 94.52 per share. barrel

  • gold (GC = F): + $ 20.70 (+ 1.06%) to $ 1,966.30 per share. ounce

  • 10-year Treasury (^ TNX): +4.2 bps to give 2.7550%

7:13 am ET: Twitter shares fell after Musk decided not to join the board

Shares on Twitter (TWTR) fell Monday morning, giving back some of last week’s gains after Tesla CEO Elon Musk chose not to join the board of directors of the social media company after taking a stake of more than 9%.

“Elon’s appointment to the board should officially take effect on 4/9, but Elon announced the same morning that he will no longer be joining the board. I think that’s for the best,” Twitter CEO Parag Agrawal said in a tweet Monday. “We have and will always value input from our shareholders, whether they are on our board of directors or not. Elon is our largest shareholder and we will remain open to his input.”

“There will be distractions ahead, but our goals and priorities remain unchanged,” Agrawal added. “The decisions we make and how we execute are in our hands, no one else’s.”

7:07 am ET Monday: Stock futures move toward a lower opening

Here is where the markets traded on Monday morning before opening time:

  • S&P 500 futures (ES = F): -15 points (-0.33%) to 4,468.50

  • Dow futures (ÅM = F): -24 points (-0.07%) to 34,589.00

  • Nasdaq futures (NQ = F): -106.5 points (-0.74%) to 14,220.50

  • raw (CL = F): -2.49 $ (-2.53%) to $ 95.77 per. barrel

  • gold (GC = F): + $ 16.00 (+ 0.82%) to $ 1,961.60 pr. ounce

  • 10-year Treasury (^ TNX): +4.2 bps to give 2.757%

NEW YORK, NEW YORK – MARCH 30: Traders work on the floor of the New York Stock Exchange on March 30, 2022 in New York City. US stocks opened low after the rally earlier this week. (Photo by Michael M. Santiago / Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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