Futures Pointing To Modestly Lower Open On Wall Street

The major U.S. index futures are currently pointing to a modestly lower open on Monday, with stocks likely to see further downside following the steep drop seen in the previous session.

Lingering concerns about higher interest rates, inflation and the ongoing war in Ukraine are likely to continue to weigh on the markets.

Following the rally seen in the previous session, stocks showed a substantial move back to the downside during trading on Friday. The major averages more than offset yesterday’s gains, with the Nasdaq plunging to its lowest closing level since late November 2020.

The major averages saw continued weakness going into the close, ending the session near their worst levels of the day. The Dow dove 939.18 points or 2.8 percent to 32,977.21, the Nasdaq plummeted 536.89 points or 4.2 percent to 12,334.64 and the S&P 500 tumbled 155.57 points or 3.6 percent to 4,131.93.

The sell-off on the day capped off the worst month for the Nasdaq since October 2008, with the tech-heavy index showing a 13.3 percent nosedive. The S&P 500 also plunged by 8.8 percent for April, marking its worst month since March 2020, while the Dow slumped by 4.9 percent.

A negative reaction to the latest batch of earnings news contributed to the sharp pullback on Wall Street, with shares of Amazon (AMZN) plummeting by 14.1 percent to their lowest closing level in almost two years.

The steep drop by Amazon came after the online retail giant reported an unexpected first quarter loss and provided disappointing revenue guidance for the current quarter.

Semiconductor giant Intel (INTC) also tumbled by 6.9 percent after reporting first quarter results that exceeded analyst estimates but issuing weak guidance for the second quarter.

Shares of Apple (AAPL) also moved to the downside after the tech giant reported better than expected fiscal second quarter earnings but warned supply chain issues would hurt third quarter sales by as much as $8 billion.

The sell-off on Wall Street may also have reflected traders moving money out of stocks ahead next week’s Federal Reserve meeting, with the central bank widely expected to raise interest rates by 50 basis points.

On the U.S. economic front, a report released by the Commerce Department showed U.S. personal income increased by slightly more than expected in the month of March, while U.S. personal spending jumped by much more than anticipated.

The Commerce Department said personal income rose by 0.5 percent in March after climbing by an upwardly revised 0.7 percent in February.

Economists had expected personal income to rise by 0.4 percent compared to the 0.5 percent increase originally reported for the previous month.

The report also showed personal spending jumped by 1.1 percent in March after advancing by an upwardly revised 0.6 percent in February.

Personal spending was expected to increase by 0.7 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, a reading on inflation said to be preferred by the Fed showed the annual rate of core consumer price growth slowed to 5.2 percent in March from 5.3 percent in February.

Retail stocks saw substantial weakness amid the steep drop by Amazon, with the Dow Jones U.S. Retail Index plunging by 7.8 percent to its lowest closing level in over a year.

Concerns about higher interest rates also contributed to a sell-off by commercial real estate stocks, as reflected by the 4.7 percent nosedive by the Dow Jones U.S. Real Estate Index.

Intel also helped lead the semiconductor sector lower, resulting in a 4.5 percent slump by the Philadelphia Semiconductor Index.

Telecom, oil service, networking and banking stocks also saw considerable weakness amid broad based selling pressure on Wall Street.

Commodity, Currency Markets

Crude oil futures are plunging $3.93 to $100.76 a barrel after falling $0.67 to $104.69 a barrel last Friday. Meanwhile, after jumping $20.40 to $1,911.70 an ounce in the previous session, gold futures are tumbling $36.10 to $1,875.60 an ounce.

On the currency front, the U.S. dollar is trading at 129.81 yen versus the 129.70 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0524 compared to last Friday’s $1.0545.

Asia

Asian stocks fell in thin trading on Monday, with markets in Malaysia, Singapore, Taiwan, China, Hong Kong and Indonesia closed for holidays.

Underlying sentiment was hit by concerns over inflation, the ongoing war in Ukraine and Covid-19 lockdowns in China.

Disappointing factory activity data from China, the top trading partner for much of the region, also added to concerns about slowing global growth.

China released data on Saturday showing that factory activity in the country contracted for a second month to its lowest since February 2020 because of Covid lockdown.

Separately, Caixin released its own manufacturing purchasing managers’ index, revealing a second straight month of deterioration.

Japan’s Nikkei 225 Index ended slightly lower as investors awaited this week’s FOMC meeting outcome for directional cues. The Nikkei slipped 0.1 percent to 26,818.53 ahead of the Golden Week holidays from Tuesday to Thursday.

Tech stocks led losses with Advantest tumbling 4.8 percent. Nintendo lost 2.4 percent after saying it expects to sell only about 20 million Switch game consoles in the current fiscal year.

Murata Manufacturing jumped 5.2 percent and Fujitsu added 5 percent after reporting strong earnings. Technology conglomerate Hitachi surged 6.7 percent after U.S. private equity company KKR agreed to buy the company’s logistics arm in a $5.2-billion deal.

In economic news, Japan’s consumer confidence index rose for the first time in six months in April, while factory activity expanded at a slower pace from the previous month in April, separate reports showed.

Australian markets tumbled amid broad-based selling as traders priced in a 15-basis-point hike at the RBA’s May 3 meeting. The benchmark S&P/ASX 200 Index fell 1.2 percent to 7,347. Tech stocks such as Tyro and Xero lost 6-7 percent.

Qantas advanced 2.9 percent after the airline said it expects to return to profitability in the financial year 2023-24.

New Zealand’s NZX-50 Index ended down 0.8 percent at 11,784.36, with Air New Zealand and A2 Milk losing 1-2 percent.

South Korea’s Kospi dipped 0.3 percent to 2,687.45, snapping a two-day winning streak on concerns over the Fed’s aggressive tightening and increasing concerns about difficulties in global supply chains.

The downside was capped after survey data showed the manufacturing sector in South Korea expanded at a faster rate in April. Tech stocks and financials were among the worst hit.

Europe

European stocks have tumbled on Monday, with growth worries and interest rate fears weighing on markets ahead of this week’s FOMC meeting.

While the U.K. markets are closed for a bank holiday, the German DAX Index is down by 1.2 percent and the French CAC 40 Index is down by 1.8 percent.

Tech, auto and luxury stocks are among the prominent decliners after data showed China’s manufacturing activity slumped to its lowest level since February 2020.

German retail turnover was down by 0.1 percent on a monthly basis in March, offsetting a 0.1 percent rise in the previous month and in contrast to the expected growth of 0.3 percent, data showed earlier today.

On a yearly basis, retail sales fell 2.7 percent, confounding expectations for an increase of 6.1 percent.

Italian banking group Intesa Sanpaolo has dropped after renewing the term of its chief executive and managing director, Carlo Messina.

Danish wind turbine firm Vestas has slumped. The company trimmed its fiscal 2022 outlook after reporting a wider net loss in its first quarter.

France’s Airbus has also moved to the downside despite receiving a large order from airline Qantas for its London-Sydney route.

Air Liquide SA, a provider of industrial gases and services, has also fallen. The company announced a joint venture with Lotte Chemical to boost the hydrogen supply chain for mobility markets in South Korea.

German property group Adler Group SA has plummeted. All members of its board of directors have offered to resign with immediate effect after an auditor declined to give an opinion on the company’s financial statements.

Sixt SE, an international mobility service provider, has also shown a notable move to the downside after it was hit by a cyber-attack.

U.S. Economic Reports

The Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of April at 10 am ET.

The ISM’s manufacturing PMI is expected to inch up to 58.0 in April from 57.1 in March, with a reading above 50 indicating growth in the sector.

Also at 10 am ET, the Commerce Department is due to release its report on construction spending in the month of March. Construction spending is expected to increase by 0.8 percent.