January 27, 2023

Stock futures flat as struggles continue on Wall Street

Stock futures flat as struggles continue on Wall Street

Stock futures fluctuated on Tuesday, following the Bank of Japan’s announcement as traders feared the year-end rally may not pay off.

Futures linked to the Dow Jones Industrial Average fell 5 points, or 0.02%, after earlier falling more than 200 points. S&P 500 and Nasdaq 100 futures fell 0.17% and 0.42%, respectively.

On Monday, the Dow Jones fell more than 162 points, or about 0.5%. The S&P 500 fell 0.9%, and the Nasdaq Composite lost nearly 1.5%. Stocks are on track to end the month and year in the red, and investors’ hopes for Santa’s ascent are fading fast.

“There is still no vision for Santa. Fasten your seatbelts,” said Louis Navellier, founder of the growth investment firm Navellier & Associates. “One would like to think that all the bad news is out there. No more Fed action until February at the earliest. We’re not giving up our loopholes but we’re certainly not regaining last week’s losses.”

Fears that the Federal Reserve could push the economy into a recession plagued investors. Last week, the central bank raised its benchmark interest rate by 50 basis points and policymakers signaled that the final rate could rise to 5.1%.

Other hawkish central banks put more pressure on traders, with the European Central Bank raising interest rates and projecting further hikes last week. Overnight on Tuesday, the Bank of Japan moved to expand its cap on 10-year Japanese government bond yields, Catching merchants around the world by surprise.

“More than 90% of central banks have raised interest rates this year, making the (mostly) coordinated global effort unprecedented,” said Lawrence Gillum, fixed income analyst at LPL Financial. “The good news? We believe we are nearing the end of interest rate hike cycles, which can reduce the headwinds we have seen in global financial markets this year.”

A handful of major companies will report their quarterly results this week before the Christmas holidays. General Mills will appear before the bell Tuesday. Nike and FedEx are set to report after the bell.

In economic data, homebuilding data for November is due on Tuesday morning. This week promises a lot of insight into the housing industry. Sales data for existing homes and new homes will be released on Wednesday and Friday, respectively.

The November personal consumption expenditures report, the Fed’s preferred measure of inflation, is due out on Friday.