Business

US stock futures rise after market plunges to 5-week low


U.S. stock futures rallied on Monday, suggesting Wall Street will attempt to recover after falling to its lowest level since early November on recession fears.

How to trade stock index futures?
  • S&P 500 Futures Contract
    ES00,
    +0.26%

    up 15 points, or 0.4%, to 3894

  • Dow Jones Industrial Average Futures
    YM00,
    +0.21%

    added 107 points, or 0.3%, to 33235

  • Nasdaq-100 Futures
    NQ00,
    +0.26%

    up 47 points, or 0.4%, to 11392

On Friday, the Dow Jones Industrial Average
DIA,
-0.85%

down 282 points, or 0.85%, to 32920, S&P 500
SPX,
-1.11%

down 43 points, or 1.11%, to 3852 and Nasdaq Composite
CALCULATOR,
-0.97%

fell 105 points, or 0.97%, to 10705.

The S&P 500 has fallen for two straight weeks, falling 5.4% in that time period. It is still down 19.2% so far.

What drives the market?

Equity index futures are inching up as markets attempt to recover after Wall Street’s benchmark S&P 500 closed Friday at a five-week low.

Recently, investors have become increasingly concerned about a recession that they feel is almost inevitable. resolute hawk stance of major monetary authorities, such as the Federal Reserve and the European Central Bank, as they continue to battle high inflation.

Last week, along with the Bank of England and others, the duo raised interest rates by 50 basis points to multi-year highs and two strained borrowing costs are likely to mount higher in the near term. longer than market expectations.

“The Fed and the ECB seem determined to leave a lump of coal in everyone’s stockpile this holiday season,” said Stephen Innes, managing partner at SPI Asset Management.

“With economic data coming in below expectations, it’s not exaggerated to think that investors might shift focus from inflation and the Fed to the growing impact that the Fed’s actions could have,” Innes added. to the economy by 2023”.

Weak performance on Wall Street in the previous sessions and fears of a global slowdown sent Asian stock markets lower again on Monday, with China’s Shanghai Composite
SHCOMP,
-1.92%

among the weakest amid concerns about Increasing COVID cases in the world’s most populous country.

Analysts note that investors have moved on from believing that bad news about the economy is good news for both bonds and stocks – because that discourages central banks from being too aggressive in tightening their policy – and are now seeing bad economic news as a scenario. may cause damage to the company’s earnings.

Source: BTIG

“The biggest change in the market over the past few weeks, in our view, has been the change in the correlation between stocks and bonds. For most of this year, bonds and stocks traded side by side, when inflation was high,” Jonathan Krinsky, director of market engineering at BTIG, said in a note to clients. .

“Recently, that has turned around and lower rates have been met with lower reserves, presumably due to recession fears. We expect that theme to grow stronger in 2023,” added Krinsky.

US economic updates due out Monday include the NAHB constructors index for December, at 10 a.m. ET.

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