U.S. equity futures edged slightly higher ahead of overnight trading Monday after stocks extended a sharp sell-off that sent all three major indexes to their lowest level year-to-date.
Futures tied to the S&P 500 rose 0.3% after the benchmark closed below 4,000 for the first time since March 2021, deepening losses from its longest streak of weekly declines since 2011. Contracts on the Dow were up 0.2% after the index erased over 650 points in the main session, and Nasdaq futures inched 0.3% higher, clawing back from a 4.3% drop in earlier trading.
Meanwhile, the benchmark 10-year Treasury note yield was above 3%, its highest level since the end of 2018, and the CBOE Volatility Index (VIX), Wall Street’s “fear gauge,” jumped above 34, well above its longer-run average of around 20.
The moves expand a period of recent turbulence for equity markets as worries around inflation, rising interest rates, and the possibility of an economic slowdown continue to weigh on investor sentiment.
“The market is void of major positive catalysts right now, so it is not surprising that we’re starting the week off under pressure,” Brian Price, head of investment management at Commonwealth Financial Network said in an emailed note.
Adding to headwinds is a lackluster earnings season that has raised concerns over how corporate profits will fare amid persistent macroeconomic disruptions. As of Friday, the percentage of S&P 500 companies beating EPS estimates was above the five-year average, but the magnitude of the upside surprises was below the five-year average, according to data from FactSet.
“Another catalyst that could be causing some risk aversion as of late is a fairly underwhelming earnings season,” Price added. “It certainly wasn’t as strong as the past few quarters and there is even more ambiguity surrounding future EPS outlooks given the tremendous amount of macro uncertainty.”
For this earnings season so far, 87% of the companies in the S&P 500 have reported actual results for the first quarter year-to-date as of Friday, per FactSet’s latest available data. Investors look ahead to more major reports underway this week from major names including Disney (DIS), Peloton (PTON) and Rivian Automotive (RIVN).
On the economic data front, Wednesday’s Consumer Price Index (CPI) will also be closely-watched by traders for the latest snapshot on the state of inflation in the U.S. The figure is expected to offer clues on how much more aggressively the Federal Reserve will need to act in order to mitigate rising prices.
“The equity market continues to struggle when factoring in the implications of inflation and rising market interest rates on share prices,” Comerica Wealth Management Chief Investment Officer John Lynch said in a note on Monday.
“This is a tightrope walk by the Fed. If it moves too slowly, it risks not tamping down inflation and having higher inflation expectations become embedded – making it more difficult to eliminate,” Lynch noted. “Conversely, if the Fed raises rates too quickly, it risks tilting the economy into recession, with the associated job losses and other costs. The Fed indeed has a difficult task in front of it.”
6:14 p.m. ET Monday: Stock futures tick higher after S&P 500 closes below 4,000
Here’s where stock futures were in post-market trading Monday evening:
S&P 500 futures (ES=F): +10.50 (+0.26%) to 3,998.00
Dow futures (YM=F): +78.00 (+0.24%) to 3,998.00
Nasdaq futures (NQ=F): +42.00 (+0.34%) to 12,235.75
Crude (CL=F): -$0.30 (-0.29%) to $102.79
Gold (GC=F): -$5.30 (-0.29%) to $11,853.30 per ounce
10-year Treasury (^TNX): -4.4 bps to yield 3.0790%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc