Stock futures rise to start the week

Stock futures rise to start the week

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, December 7, 2022.

Brendan McDermid | Reuters

Stock futures rose Monday after the major averages posted their second straight week of losses for the first time since September. Investors also struggled to shake off recession fears.

Futures tied to the Dow Jones Industrial Average gained 42 points, or 0.13%, while S&P 500 and Nasdaq 100 futures advanced 0.20% and 0.26%, respectively.

The moves followed another down week for stocks after the Federal Reserve delivered a 50 basis point short-term interest rate hike and signaled higher-for-longer rates. Recession fears mounted as the central bank upped its forecast for future hikes above previous expectations, saying that it now expects to hike rates to 5.1%.

Stocks are set to round out a dismal monthly performance in December. On Friday, the Dow fell 281.76 points, or 0.85%. The 30-stock index shed 1.66% for the week, bringing its monthly losses to 4.83%. The S&P 500 dropped 1.11% and tumbled 2.08% for the week, upping its monthly declines to 5.58%. The Nasdaq Composite slumped 0.97% on Friday and 2.72% for the week. It’s down 6.65% this month.

“Monetary policy has quickly gotten restrictive now that the Fed has raised rates by 400 basis points in 9 months,” wrote Ed Moya, senior market strategist at Oanda in a note to a client Friday. “Recession risks will only grow now that [Fed chair Jerome Powell] has reported that we should expect ‘ongoing increases.'”

The National Association of Home Builders survey, which gauges monthly sentiment, is due out Monday.

Investors will also be watching for a few earnings reports due later in the week. FedEx and Nike are both scheduled to report earnings results on Tuesday after market close. As recession fears mount, earnings results will become more of a focus.

“Rates and inflation may have peaked but we see that as a warning sign for profitability, a reality we believe is still underappreciated but can no longer be ignored,” wrote Michael Wilson, equity analyst at Morgan Stanley, in a Monday note.

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