Stock Futures Drop as Investors Start Q2 Earnings

Trader on the floor of the NYSE, June 27, 2022.

Source: NYSE

U.S. stock futures fell after several hours on Monday as Wall Street looked ahead to what many expect will be the start of a volatile second-quarter earnings season this week.

Dow Jones Industrial Average futures fell 115 points, or 0.37%. Futures on the S&P 500 and Nasdaq 100 indexes fell 0.42% and 0.46%, respectively.

Shares of Gap fell more than 3% in extended trading after the clothing retailer said CEO and president Sonia Syngal would step down.

The Dow in Monday trading session fell 164.31 points, or 0.5%. The S&P 500 fell 1.2%, while the Nasdaq Composite lost nearly 2.3%.

Those moves come as investors prepare for companies to begin reporting their latest results. Market participants will keep an eye on downside risks to earnings forecasts as companies grapple with rising interest rates and greater inflationary pressures, and as Wall Street debates the possibility of a recession.

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“In terms of S&P earnings, for example, we think we’re headed for an earnings recession,” said Bruce Richards of Marathon Asset Management Monday on CNBC’s “Closing Bell.”

“Companies are being squeezed on all sides, they’re being squeezed on the cost of goods, wages and all the things that come in input from our production or service targets. And on the side. On the other hand, we think revenue is starting to flat before turning downward at a time when interest costs are going up… That’s a lot of downgrades, a lot of default from the system. system due to being charged a higher fee.”

On the earnings front, traders will be looking at some of the company’s key reports this week. On Tuesday, PepsiCo will report earnings before the market opens. Other companies reported included Delta Air Lines on Wednesday, and JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup on Thursday and Friday.

Market participants will carefully evaluate June’s consumer price index report on Wednesday. According to Dow Jones estimates, the main inflation figure, which includes food and energy, is expected to rise to 8.8% from 8.6% in May.

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