U.S. stock index futures turned slightly negative in early morning trading on Monday after the S&P posted its best week of 2022, boosted by quarterly earnings reports and a better-than-expected January employment report.
Futures contracts tied to the Dow Jones Industrial Average lost just 5 points, or less than 0.1%. S&P 500 and Nasdaq 100 futures inched up roughly 0.1% and 0.2%, respectively.
Investors will be watching more earnings reports this week, though the blistering pace of the past few weeks will slow.
Big inflation news also is on the horizon, with the Labor Department on Thursday set to release consumer price index data for January. The report is expected to show that inflation rose at a 7.2% pace from a year ago, which if accurate would be the fastest gain since February 1982.
Markets have been bracing against the fallout from inflation and are now pricing in about a 35% chance that the Federal Reserve will hike its benchmark short-term borrowing rate by half a percentage point, or 50 basis points, in March.
Government bond yields were little changed Monday after racing higher following Friday’s unexpectedly strong nonfarm payrolls report for January. The benchmark 10-year note most recently yielded 1.92%.
Peloton shares surged in premarket trading Monday on reports that Amazon and Nike are lining up as possible suitors for the interactive fitness equipment maker. The stock surged 25% on the news, which comes just a few days after activist investor Blackwells Capital urged the company to consider a sale and to fire its CEO.
Spotify saw its shares decline 1.3% after the company said it condemns past use of racial slurs by controversial podcast host Joe Rogan but would not remove him from the streaming site. Artists including Neil Young, Joni Mitchell and India.Arie have asked Spotify to remove their music in protest over Rogan.
Elsewhere, shares of Spirit Airlines jumped 11% after Frontier Airlines announced a deal to merge with its low-cost competitor.
The S&P and Nasdaq Composite advanced on Friday for their fifth positive session in the last six, and the indices also posted their best week since December. The Dow slid 0.06% on Friday, but still managed to post a 1.05% gain for the week. The Russell 2,000 meantime posted its first positive week in five and best week of 2022.
Earnings reports and the jobs report pushed the major averages higher. The Labor Department said Friday that 467,000 jobs were added in January, well ahead of the 150,000 economists polled by Dow Jones were expecting.
“The increase in payrolls came as a welcome sign for the economy,” said Peter Essele, head of portfolio management at Commonwealth Financial Network. “The increase sent confirmation to investors that rate hikes are imminent, with the first occurring in the March meeting.”
Last week’s gains follow a rocky start to the year for the major averages as rising rates prompted investors to shed growth names in favor of value-oriented areas of the market.
So far 56% of S&P 500 companies have posted quarterly earnings, with 79% beating earnings estimates and 77% topping revenue expectations.
Individual performance has been different, however. Amazon shares added 13.5% on Friday, while Snap surged 58.8%. Facebook-parent Meta dropped 26% on Thursday after its quarterly update. The social media company is coming off its worst week on record.
“Overall investors continue to ‘sell the news,’ ” Wells Fargo said Friday in a note to clients. “We are getting late in the cycle. The market is becoming more selective. The tide will no longer lift all boats and the market will become less and less forgiving.”
The firm said that looking forward investors should cut losses quickly, and focus on companies’ margins rather than top- or bottom-line numbers.
Another busy week of earnings is on deck with 76 S&P 500 companies set to post results. Three Dow components will provide quarterly updates, including Disney and Coca-Cola. Amgen, Take-Two Interactive and On Semiconductor are among the names that will report earnings on Monday.