Stock futures were lower Monday morning amid a January rally as investors braced for the busiest week of earnings season and a possible rate hike by the Federal Reserve.
Futures tied to the Dow Jones Industrial Average fell 206 points, or about 0.6%. S&P 500 futures fell 0.9%, while Nasdaq 100 futures fell 1.1%.
Wall Street had a winning week as the stock market’s January rally continued. The Nasdaq Composite rose 4.3 percent for the week, while the S&P 500 and the Dow gained 2.5 percent and 1.8 percent, respectively.The S&P 500 is up 6% in 2023 after falling 19% last year and closed at a new year-to-date high on Friday
There will be multiple tests of the 2023 rally this week. About 20 percent of the S&P 500 will report earnings this week, including McDonald’s and General Motors on Tuesday, followed by tech giants Apple, Meta Platforms, Amazon and Alphabet later in the week.
The Federal Open Market Committee meets on Tuesday and Wednesday, when the Fed is expected to raise rates by a quarter of a percentage point. Investors will be looking for clues on how much the central bank will raise interest rates to fight inflation. Traders have pushed stocks higher this year in part because of weak inflation reports, which they suspect could lead to a pause in the Federal Reserve’s interest rate hikes soon.
Mike Wilson, chief U.S. equity strategist at Morgan Stanley, wrote in a note: “While there have been some positive developments, we think the good news is now priced in and the reality may change with the end of the month and the Fed’s determination to curb inflation. Back.” Monday notes.