NYSE traders, Jan. 21, 2022.
NBC Finance Channel
Stock futures were little changed in overnight trading Sunday as investors awaited more corporate earnings results and a key Fed policy decision after the S&P 500 had its worst week since March 2020.
Dow Jones Industrial Average futures edged up 20 points. S&P 500 futures and Nasdaq 100 futures were flat.
Wall Street moved overnight after a brutal week in the face of mixed corporate earnings and concerns about rising interest rates. The S&P 500 fell 5.7% last week, closing below the 200-day moving average at a key technical level for the first time since June 2020. The blue-chip Dow fell 4.6%, its worst week since October 2020.
The sell-off in the tech-heavy Nasdaq Composite, which fell 7.6% last week, was down for a fourth straight week. The index is now more than 14% below November’s record close, falling further into correction territory.
The fourth-quarter earnings season was mixed. While more than 70 percent of the S&P 500 companies that reported earnings beat Wall Street expectations, several major companies disappointed investors last week, including Goldman Sachs and Netflix.
“The recession that was initially driven by stimulus exit turned to include earnings jitters last week,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “As a result, investors are now worried about more than just earnings. multiples, and worry about the EPS forecast itself.”
IBM will release data after the market close on Monday. Investors will also digest a slew of high-risk gains from big tech companies, including Microsoft, Tesla and Apple.
Another key market driver will be the Federal Reserve’s policy meeting that ends on Wednesday. Investors are eager to find out any signals on how much the central bank will raise interest rates this year and when they will begin.
Goldman Sachs said on Sunday that its baseline forecast calls for four rate hikes this year, but sees a risk of further hikes due to soaring inflation.
Investors are selling riskier assets this year as they brace for the Federal Reserve to tighten monetary policy. Bitcoin fell more than 8 percent over the weekend to trade around $35,511, wiping nearly half its market value from its all-time high in November.
Meanwhile, bond yields surged in the new year in anticipation of a Fed rate hike, partly sparking a sharp sell-off in growth-oriented tech stocks. While the 10-year U.S. Treasury yield ended last week down about 1.76%, the benchmark rate has risen about 25 percentage points in 2022.
“The big event so far in 2022 has been the rapid rise in interest rates, which has prompted investors to reassess valuations in some of the most expensive parts of the market and move into value stocks,” said David Lefkowitz, the firm’s head. UBS Global Wealth Management’s Americas Equity.
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