U.S. stock futures fell early Monday, reflecting a volatile week for Wall Street. Dow Jones Industrial Average futures dropped approximately 600 points, or 1.5%. S&P 500 futures fell by 2.1%, and Nasdaq-100 futures plunged 3.4%. This follows a challenging week where the Nasdaq Composite entered correction territory, marking a 10% decline from its peak.
Market Trends and Recent Developments
Wall Street’s recent performance has been dismal. On Friday, the Nasdaq Composite experienced its third consecutive week of losses, bringing the index down over 10% from a record set last month. The S&P 500 also recorded a third straight losing week, falling 2%. The Dow Jones Industrial Average ended a four-week winning streak with a 2% drop.
In Asia, markets continued their downward trend from last week. Japan’s Nikkei index entered a bear market with a 12.4% loss, closing at 31,458.42. This marked the worst day for the index since the “Black Monday” of 1987 and the largest point drop in its history. Major trading houses in Japan, such as Mitsubishi, Mitsui & Co., Sumitomo, and Marubeni, saw their stocks plunge around 10%. In South Korea, the Kospi fell 8.1% before trading was halted due to the exchange’s circuit breakers.
Bond Market Reactions
U.S. Treasury yields have also declined. The yield on the benchmark 10-year note fell to 3.79% from 4.20% the previous week. This decrease reflects investor concerns about the Federal Reserve’s recent decision to keep interest rates unchanged, leading to fears of a potential recession.
Market Sentiment and Economic Data
The recent stock pullback was exacerbated by a disappointing jobs report on Friday, heightening fears that the Federal Reserve might have made a mistake by not adjusting interest rates sooner. Investors are now keenly watching to see if this downward trend will continue.
Keith Lerner, co-chief investment officer at Truist Wealth, commented: “I think we’re in that corrective period, but we still think the bull market trend is intact. It’s just going to take a little bit to get through this kind of choppier period.”
Apple will be closely watched when the market opens Monday, following Warren Buffett’s Berkshire Hathaway significantly reducing its stake in the tech giant.
Upcoming Economic Data and Corporate Earnings
Economic data to be released Monday includes the July ISM Services PMI, expected to show a rise to 50.9 from 48.8 previously. This data could offer insights into the Federal Reserve’s potential actions on interest rates.
Additionally, San Francisco Fed President Mary Daly is set to speak at the Hawaii Executive Collaborative after the close of markets Monday, which may provide further clues about the Fed’s future plans.
European Market Performance
The regional Stoxx 600 index was 2.34% lower by 8:52 a.m. London time. All sectors and major regional bourses were in the red, with technology stocks shedding as much as 5% before recovering slightly to a 2.1% decline. Oil prices fell 3.65%, and banks were down 3.22%.
Corporate Earnings Season
The second-quarter earnings season has shown strong performance so far. Of the 75% of S&P 500 companies that have reported earnings, 78% exceeded expectations. The blended earnings growth rate for the S&P 500 is at 11.5%, the highest since Q4 2021.
This week will continue with notable earnings reports from companies including Walt Disney, Caterpillar, Costco, Eli Lilly, and Super Micro Computer. On Monday, investors will look for results from Simon Property Group, Diamondback Energy, and Tyson Foods.
As global markets remain volatile, investors are closely monitoring economic indicators and corporate earnings to navigate the current uncertainty.
