U.S. stock futures experienced a slight decline Sunday night following the Dow Jones Industrial Average’s closure of its worst week since October. Investors are eagerly awaiting inflation data slated for release later this week.
Dow Jones Industrial Average futures edged down by 21 points, or 0.05%, while S&P 500 futures and Nasdaq 100 futures saw declines of 0.17% and 0.38%, respectively.
Last week witnessed a downturn for major averages on Wall Street. The 30-stock Dow registered a 0.93% slide, marking its most substantial loss since October. Similarly, the S&P 500 experienced a 0.26% dip, and the Nasdaq Composite dropped 1.17%.
Market observers noted profit-taking activities in certain market leaders amid concerns over sky-high valuations, prompting apprehension that stocks may be poised for a correction following this year’s rally. Notably, five out of the Magnificent Seven companies saw declines last week, with Nvidia and Meta Platforms notably distancing themselves from the pack.
Friday’s release of February jobs data provided mixed signals to investors regarding the potential timing of interest rate cuts by the Federal Reserve. While the U.S. economy added more jobs than anticipated by economists, a higher unemployment rate and weaker-than-expected wage growth hinted at the possibility of the central bank easing up on monetary policy.
In the week ahead, investors will closely monitor developments related to inflation. The release of February’s consumer and producer price indexes, scheduled for Tuesday and Thursday respectively, follows January’s unexpectedly high inflation report, which dampened hopes of a smooth path toward the Fed’s 2% target. These reports represent the final major economic indicators before Fed officials convene for their March policy meeting.
“We aren’t banking on the Fed to reduce rates at its upcoming meeting later this month,” stated Mike Dickson, Head of Research at Horizon Investments. “Given the recent spike, we anticipate the Fed to refrain until it observes at least three consecutive months of lower core services inflation. This implies June at the earliest—and potentially later in 2024 if services inflation remains stubborn.”
