Futures Pointing To Continued Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to see further downside following the sell-off seen to close out the previous week.

Lingering concerns about the outlook for interest rates are likely to weigh on Wall Street ahead of the Federal Reserve’s monetary policy meeting next week.

Weakness in overseas markets may also carry over into the U.S. amid concerns about global economic growth amid a surge in Covid-19 cases in China.

Trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

Reports on durable goods orders, consumer confidence, new home sales, first quarter GDP and personal income and spending are likely to attract attention in the coming days.

Traders may also be reluctant to make significant moves ahead of the release of earnings news from a number of big-name companies.

Apple (AAPL), General Electric (GE), Alphabet (GOOGL), Microsoft (MSFT), Boeing (BA), McDonald’s (MCD), Twitter (TWTR), Amazon (AMZN), Intel (INTC) and Exxon Mobil (XOM) are just a few of the companies due to report their quarterly results this week.

Stocks moved steadily lower throughout the trading session on Friday, extending the sharp pullback seen on Thursday. With the steep drop on the day, the major averages slumped to their worst closing levels in over a month.

The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Dow plummeted 981.36 points or 2.8 percent to 33,811.40, the Nasdaq plunged 335.36 points or 2.6 percent to 12,839.29 and the S&P 500 dove 121.88 points or 2.8 percent to 4,271.78.

The extended sell-off contributed to substantial losses for the week. The Dow slumped by 1.9 percent, while the S&P 500 and the Nasdaq tumbled by 2.8 percent and 3.8 percent, respectively.

The continued weakness on Wall Street partly reflected ongoing concerns about the Federal Reserve aggressively tightening monetary policy.

In comments on Thursday, Fed Chair Jerome Powell said he saw merit in “front-end loading” policy moves and indicated a 50 basis point rate hike would be on the table at the central bank’s next meeting in early May.

CME Group’s FedWatch Tool currently indicates a 50 basis point rate hike at the May meeting is a near certainty.

Traders may also have been moving out of stocks ahead of the release of a deluge of earnings news from big-name companies this week.

Among individual stocks, shares of Gap (GPS) fell sharply after the apparel retailer lowered its first quarter sales guidance and announced the departure of Old Navy President and CEO Nancy Green.

Telecom giant Verizon (VZ) also came under pressure after reporting first quarter earnings in line with estimates but providing disappointing guidance.

On the other hand, shares of Kimberly-Clark (KMB) spiked after the consumer products company reported better than expected first quarter results and raised its full-year sales forecast.

Steel stocks turned in some of the market’s worst performances on the day, dragging the NYSE Arca Steel Index down by 3.9 percent to its lowest closing level in a month.

Substantial weakness was also visible among healthcare stocks, as reflected by the 3.6 percent plunge by the Dow Jones U.S. Health Care Index. The index also tumbled to a one-month closing low.

Hospital operator HCA Healthcare (HCA) helped lead the sector lower, plummeting by 21.8 percent after reporting first quarter earnings that missed analyst estimates.

Airline stocks also showed a significant move to the downside on the day, resulting in a 3.5 percent nosedive by the NYSE Arca Airline Index. The index gave back ground after ending the previous session at its best closing level in two months.

Brokerage, chemical and computer hardware stocks also moved considerably lower, reflecting broad based selling pressure on Wall Street.

Commodity, Currency Markets

Crude oil futures are plunging $4.64 to $97.43 a barrel after tumbling $1.72 to $102.07 a barrel last Friday. Meanwhile, after falling $13.90 to $1,934.30 an ounce in the previous session, gold futures are tumbling $37.70 to $1,896.60 an ounce.

On the currency front, the U.S. dollar is trading at 128.14 yen versus the 128.50 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0745 compared to last Friday’s $1.0790.

Asia

Asian stocks tumbled on Monday amid lingering concerns about rapid U.S. rate increases and slowing growth as Covid cases continued to spread in China.

The euro found support after Emmanuel Macron was re-elected as French President for a second term, reassuring markets about France’s commitment to an integrated Europe.

China’s Shanghai Composite Index plummeted 5.1 percent to 2,928.51 amid fears coronavirus restrictions in China would extend to Beijing.

Hong Kong’s Hang Seng Index tumbled 3.7 percent to 19,869.34 on growth concerns as the lockdown of China’s commercial capital showed little signs of easing.

Shanghai officials today reported 51 COVID-related deaths for the previous day, the highest daily tally recorded in China since the initial outbreak in Wuhan two years ago.

Japanese shares fell the most in more than six weeks as investors waited to see whether the Bank of Japan will adjust monetary settings at its upcoming policy meeting. The Nikkei 225 Index slumped 1.9 percent to 26,590.78 – marking the biggest percentage decline since March 11.

Heavyweight Uniqlo clothing owner Fast Retailing tumbled 5.3 percent, and technology investor SoftBank Group plunged 7.8 percent.

Nissan Motor lost over 5 percent on a report that its top shareholder Renault SA was exploring a potential stake sale. Airline ANA Holdings declined 3.4 percent after cutting its earnings forecast.

Australia and New Zealand markets were closed for a holiday. Seoul stocks fell for a second day running and the won dipped on worries over rates and inflation. The Kospi plunged 1.8 percent to 2,657.13.

Growth-linked tech large-caps Samsung Electronics and SK Hynix dropped 1-2 percent on worries that higher borrowing costs for businesses and households, exacerbated by war in Ukraine and disruption from coronavirus-related lockdowns in China, can slow the economy.

Automaker Hyundai Motor rose 1.1 percent after reporting its largest first-quarter operating profit in nearly eight years.

Europe

European stocks have tumbled to one-month lows on Monday due to worries surrounding China’s Covid resurgence, runaway inflation and the expected response by global central banks.

In economic news, data showed earlier in the day that business confidence in Germany stabilized at a low level in April. The Ifo business-climate index rose to 91.8 points from 90.8 points in March.

While the U.K.’s FTSE 100 Index has slumped by 1.8 percent, the French CAC 40 Index is down by 1.6 percent and the German DAX Index is down by 1.2 percent.

China-exposed commodity and luxury stocks are among the worst hit as fears grew that Beijing was on the verge of joining Shanghai in lockdowns.

French luxury goods company Kering tumbled 4.9 percent. Gaming group Ubisoft soared 6.3 percent on reports that the company is attracting takeover interest from buyout funds.

Dutch health technology company Philips plummeted 8.8 percent after its quarterly operating profit missed analyst estimates.

BBVA fell 2.6 percent after the Spanish lender raised the price it’s offering to shareholders of its Turkish unit. Shares of Turkish bank Garanti jumped 5.5 percent.

British Land was down about 2 percent. The property development and investment company said it had sold a 75 percent stake in the majority of its Paddington Central assets to Singapore’s sovereign wealth fund GIC for 694 million pounds ($885.9 million).

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today.