Futures on Wall Street’s main benchmarks were little changed ahead of overnight trading Monday following a choppy session that saw stocks climb in the final hour to cap the day at six-week highs.
Contracts on the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite were muted post-market after advancing into a third week, buoyed by a comeback in technology stocks. Big names in the sector — Tesla, Amazon, and Apple — each rallied during intraday trading Monday following a rough start to the year stoked by a risk-off sentiment amid a liftoff in interest rates by the Federal Reserve.
“Corporate America is in excellent shape — earnings estimates are higher in 2022 now than they were at the start of the year, which is no small feat,” LPL Financial equity strategist Jeff Buchbinder said in a note, adding, however, that the positive outlook was not without risks, particularly around the Fed’s inflation fight. Buchbinder pointed out the S&P 500 registered a 19% correction when the Federal Reserve last bumped rates up three years ago.
“We saw in 2018 what can happen when the market thinks the central bank is getting too aggressive,” he said. “And certainly we would not dismiss the potential for an escalation of the war in Europe and a broader conflict.”
Also weighing on corporate earnings is a slowdown in economic expansion and a challenging margin environment set forth by wage pressures, supply chain woes, materials and labor shortages, and rising commodity price, LPL Financial noted. These factors could make big earnings upside for companies to achieve and leave valuations to do the heavy lifting — but those valuations may not offer enough support to prop the S&P 500 up to 5,000 at year-end.
F.L. Putnam chief market strategist Ellen Hazen echoed a similar view on Yahoo Finance Live Monday.
“As we see inflation across the board for companies, we expect margins to continue to be under pressure,” Hazen said.
Inflation worries are also mounting for everyday Americans. The Conference Board’s Consumer Confidence Index due for release on Tuesday will show a timely snapshot of their thinking following the latest spike in prices. Economists surveyed by Bloomberg are looking for the index to fall to 107.0 for March following a read of 110.5 last month.
There will also be a new read on labor demand with the Job Openings and Labor Turnover Survey (JOLTS) for February scheduled for release Tuesday morning. Analysts are expecting 11 million vacancies, little changed from January’s 11.26 million openings. The results will jump start a week of fresh jobs data for March, which includes ADP’s private payrolls (out on Wednesday) and the crucial jobs report (Friday).
Investors got some relief on Monday as the CBOE Volatility Index (^VIX), which measures volatility and serves as a gauge of market sentiment, dipped. Wall Street’s “fear index,” better known as the VIX, settled below 20 for the first time since January after hovering at elevated levels in recent weeks.
Meanwhile, oil prices tanked on Monday after Shanghai implemented a lockdown to curb a surge in COVID-19 infections, renewing fears of a slowdown in demand. WTI Crude Oil futures (CL=F) plunged 9.2% to settle at around $103 per barrel, recording their biggest drop in two weeks.
The war in Ukraine remains on the radar for investors. The Kremlin said Monday that peace talks between Russia and Ukraine may continue this week when officials from both countries meet in Turkey on Tuesday.
“While we cannot and will not speak about progress at the talks, the fact that they continue to take place in person is important, of course,” Kremlin spokesperson Dmitry Peskov told reporters on a conference call.
Peskov added that no major progress had been made in the talks themselves or the possibility of a face-to-face meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy.
6:16 p.m. ET: Futures open flat after stocks close at 6-week highs
Here’s where the major stock index futures opened Monday evening:
S&P 500 futures (ES=F): +0.25 points (+0.01%) to 4,568.25
Dow futures (YM=F): -14.00 points (-0.04%) to 34,839.00
Nasdaq futures (NQ=F): -10.75 points (-0.07%) to 14,974.50
Crude (CL=F): -$2.43 (-2.29%) to $103.53 a barrel
Gold (GC=F): -$17.60 (-0.91%) to $1,922.20 per ounce
10-year Treasury (^TNX): -1.5 bps to yield 2.477%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc