US stock futures fell Monday morning after global stocks fell as concerns about an escalating COVID outbreak in China amid heightened inflation and tightening monetary policy added to jitters about US economic growth.
Contracts on the S&P 500 fell nearly 1% before the opening bell as the index looked to extend last week’s losses. The Dow and Nasdaq also headed for lower opens. US Treasury yields fell and the benchmark 10-year yield hovered just above 1.8%.
West Texas crude oil futures fell more than 4% to trade below $98 a barrel amid growing fears about the economic impact of extending virus-related restrictions across China. Beijing saw a spike in COVID cases over the weekend, prompting more mandatory testing and some lockdowns in the region. And this comes as other populous cities, including Shanghai, have also recently grappled with fresh waves of infection, even though the country is working to eliminate the virus as part of a zero-COVID policy.
In a note released last week, Bank of America economist Helen Qiao lowered her forecast for China’s gross domestic product (GDP) growth to 4.2% from 4.8% for 2022 as the number of lockdowns mounted across the country .
“COVID-19 lockdowns and restrictions imposed in Shanghai and neighboring cities not only affect local demand, but also cause logistical breakdowns and widespread supply chain disruptions inside and outside the area,” Qiao wrote in the March 19 statement “Even if such control measures are eventually reversed and economic activity gradually normalizes by mid-year, a heavy toll on growth already seems inevitable.”
Meanwhile, investors also grappled last week with repeated claims from Federal Reserve officials that the central bank would take a tough stance on curbing inflation. Fed Chair Jerome Powell and San Francisco Fed Chair Mary Daly were among the latest to suggest that they would support a 50 basis point rate hike this year. These above-average hikes would speed up the Fed’s policy response to inflation in the short term.
The story goes on
“Mr Powell reiterated the Fed’s focus on elevated prices and the need for policy to move towards neutral to restore price stability. His comments pretty much confirm market expectations of a 50 basis point hike at the May 3-4 FOMC meeting, which would be the first such move since 2000,” wrote Rubeela Farooqi, chief US economist at High Frequency Economics, in a note.”While Mr. Powell did not comment on the course of policy after the FOMC meeting in May, other Fed officials — including San Francisco President Daly and Chicago President Evans — said that this year a few raises of 50 basis points are possible.”
Though Federal Reserve officials are on a quiet streak this week ahead of next week’s central bank meeting, a chock-full list of corporate earnings results will keep investors’ attention. A bevy of large companies and stock index components will be reporting results in the coming days, including Alphabet (GOOGL), Meta Platforms (FB), Apple (AAPL) and Amazon (AMZN).
As of Friday, about a fifth of S&P 500 companies had reported their actual first-quarter results. Of those, 79% beat Wall Street earnings estimates, while 69% beat sales expectations, according to data from John Butters, FactSet’s senior earnings analyst. The expected earnings growth rate for the index this week was 6.6%, which, if carried through to the end of the earnings season, would represent the slowest growth rate since the fourth quarter of 2020, Butters noted.
—
7:13 am ET: Coca-Cola beats 1Q expectations
Coca-Cola (KO) reported first-quarter sales and earnings that beat Wall Street estimates, with broad-based growth across the beverage giant’s portfolio of brands helping to boost results.
Adjusted operating income rose 16% year over year to $10.5 billion, beating consensus expectations of $9.8 billion, according to Bloomberg data. Company-wide general cargo volume — a closely watched metric for Coca-Cola — rose 8%, with the most significant growth coming from the company’s nutrition, juice, dairy and plant-based beverages segment, where general cargo volume rose 12%. Bottom line, comparable earnings per share came in at 64 cents vs. 58 cents expected.
For the year as a whole, Coca-Cola expects commodity price inflation to be in the mid single-digit percentage range. It also expected the suspension of its business in Russia to have a 1% impact on full year unit case volume and a 1-2% impact on net sales and operating income.
—
7:06 am ET: Stock futures are falling, adding to last week’s losses
Here’s where the shares were trading on Monday morning:
S&P 500 Futures (ES=F): -36.25 (-0.85%) to 4,231.00
Dow futures (YM=F): -270 (-0.8%) to 33,458.00
Nasdaq futures (NQ=F): -106.75 (-0.8%) to 13,246.75
raw (CL=F): -$4.73 (-4.63%) to $97.34
Gold (GC=F): -$23.10 (-1.19%) to $1,911.20 per ounce
10-year government bonds (^TNX): -6.9 basis points for a return of 2.837%
NEW YORK, NEW YORK – MARCH 30: Traders work on the floor of the New York Stock Exchange on March 30, 2022 in New York City. US stocks opened low after rallying earlier in the week. (Photo by Michael M. Santiago/Getty Images)
—
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Instagram, youtube, Facebook, flipboardand LinkedIn