US stock futures fell on Monday morning as global stocks fell as fears of an escalating COVID outbreak in China added to concerns about US economic growth amid rising inflation and tightening monetary policy.
Contracts for the S&P 500 fell nearly 1% before the start of the start, as the index seemed to add to last week’s losses. Dow and Nasdaq also focused on lower openings. US government bond yields fell and the reference 10-year yield was just over 1.8%.
West Texas crude futures fell more than 4 percent to trade below $ 98 a barrel, with concerns about the economic impact of expanding virus restrictions in China growing. Beijing marked a jump in COVID cases over the weekend, leading to more mandatory tests and some blockades in the region. And this happened when other populated cities, including Shanghai, also recently faced new waves of infections, even as the country worked to eliminate the virus under a zero-COVID policy.
In a note published last week, Bank of America economist Helen Qiao lowered her forecast for China’s gross domestic product (GDP) growth to 4.2% from 4.8% in 2022 as the number of blockages across country increased.
“COVID-19 locks and restrictions imposed in Shanghai and neighboring cities are not only hitting local demand, but also causing logistical disruptions and widespread supply chain disruptions inside and outside the region,” Qiao said in a note published on April 19. . “In our view, even if these control measures are eventually lifted and economic activities are gradually normalized by the middle of the year, a severe blow to growth already seems inevitable.”
Investors, meanwhile, are also struggling with repeated claims by Federal Reserve officials last week that the central bank will take a firm stance to curb inflation. Fed Chairman Jerome Powell and Fed President Mary Daly in San Francisco were among the last to speculate that they had seen a 50-point increase in interest rates this year. These larger-than-typical increases would trigger the Fed’s monetary policy response to inflation in the short term.
The story continues
“Mr Powell reiterated the Fed’s focus on rising prices and the need to move policy towards neutrality in order to restore price stability. His comments largely confirm market expectations for a 50 basis point increase at the FOMC meeting on May 3-4. which would be the first such move since 2000, “Rubella Farouki, chief US economist at High Frequency Economics, wrote in a note. “While Mr Powell did not comment on the trajectory of the policy after the FOMC meeting in May, other Fed officials – including the president of the San Francisco Daily and the president of Chicago Evans – said several increases of 50 basis points were possible this year. “
Although Federal Reserve employees are quiet this week before next week’s central bank meeting, a full list of results for corporate profits will attract investors’ attention. In the coming days, many large companies and components of the stock exchange index will publish results, including Alphabet (GOOGL), Meta Platforms (FB), Apple (AAPL) and Amazon (AMZN).
As of Friday, about one-fifth of the S&P 500 companies had reported actual results for the first quarter. Of these, 79% exceeded Wall Street earnings forecasts, while 69% exceeded sales expectations, according to FactSet senior revenue analyst John Butters. The expected growth rate of profits for the index amounted to 6.6% this week, which, if carried over to the end of the reporting season, will mark the slowest growth rate since the fourth quarter of 2020, said Butters.
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7:13 a.m. ET: Coca-Cola exceeds 1st quarter expectations
Coca-Cola (KO) reported first-quarter sales and profits that exceeded Wall Street estimates, with broad growth in the beverage giant’s portfolio helping boost results.
Adjusted operating income rose 16 percent from a year earlier to $ 10.5 billion, beating consensus expectations by $ 9.8 billion, according to Bloomberg. The volume of units throughout the company – a closely monitored measure for Coca-Cola – increased by 8%, with the growth coming most noticeably from the company’s segment of food, juice, dairy and plant-based beverages, where the volume of single cans is increased by 12%. In the end, comparable earnings per share reached 64 cents against the expected 58 cents.
For the full year, Coca-Cola said it expects commodity price inflation to be in single-digit averages. He also expects the closure of his business in Russia to generate a 1% impact on unit volume throughout the year and a 1-2% impact on net income and operating income.
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7:06 a.m. ET: Stock futures are down, adding to last week’s losses
Here is where the shares were traded on Monday morning:
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S&P 500 futures (ES = F): -36.25 (-0.85%) to 4231.00
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Dow futures (YM = F): -270 (-0.8%) to 33,458.00
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Nasdaq futures (NQ = F): -106.75 (-0.8%) to 13,246.75
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Crude (CL = F): $ -4.73 (-4.63%) to $ 97.34
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Gold (GC = F): – $ 23.10 (-1.19%) to $ 1,911.20 per ounce
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10-year treasury (^ TNX): -6.9 bps to 2.837% yield
NEW YORK, NEW YORK – MARCH 30: Traders are working on the floor of the New York Stock Exchange on March 30, 2022 in New York. US stocks opened low after a rally earlier this week. (Photo by Michael M. Santiago / Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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