Stock futures drop as inflation concerns outweigh earnings optimism


Stock futures fell Monday morning to give back some gains after the S&P 500’s best week since July, with investors’ concerns over elevated inflation offsetting hopes that more companies will follow the lead of the big banks last week and post strong quarterly earnings results. 

Contracts on the Dow dropped about 100 points, or 0.3%, with about two hours until the opening bell. The S&P 500 and Nasdaq also headed for lower opens. The moves tracked a drop in overseas equities after China reported its slowest GDP growth rate since last year for the third quarter, as energy shortages and property-sector turmoil dragged down economic activity in the world’s second-largest economy. 

This week, investors are looking ahead to a packed slate of corporate earnings results, which will help offer more insights into how companies across various industries have navigated inflationary trends, widespread labor scarcities and lingering virus-related disruptions. Remarks from some executives have further confirmed the weight of these issues. Fastenal (FAST) CEO Daniel Florness said during last week’s earnings call that “product and shipping cost inflation is not just high, it’s brutally high.” 

But an otherwise strong start to earnings season last week helped fuel optimism that corporate profits held up more strongly than anticipated across the board, even in the face of a myriad supply-related challenges. Big banks from Morgan Stanley (MS) to Bank of America (BAC) and Goldman Sachs (GS) handily topped estimates in their third quarter results last week, and many of these companies’ executive offered upbeat assessments of the state of the U.S. consumer, or the demand engine of the U.S. economy. These remarks had helped affirm trends seen in recent economic data, with U.S. retail sales unexpectedly posting a monthly gain of 0.9% in September, government data last week showed. 

“We started off this week really strong. The banks have done great … That started to relieve a little bit of people’s concerns, especially when you had the CEOs of the bank saying the consumer looks strong,” Victoria Fernandez, Crossmark Global Investments chief market strategist, told Yahoo Finance Live on Friday. “And that, I think, is going to be the key for the market going forward. If the consumer is there and they’re willing to spend — which we’ve seen in the month of September [when] retail sales started to come back a little bit — then I think that gives a little more optimism to the market that as we continue to reopen, as earnings are strong, the consumer will be there, and the equity markets will continue to trend higher.”

As of Friday, the expected earnings growth rate for the S&P 500 was 30%, according to FactSet. That figure — based on both actual earnings from companies that have reported so far and expectations for future results — represented an increase from the prior week, when the anticipated earnings growth rate for the third quarter stood at about 27.6%.

7:58 a.m. ET: Bitcoin prices hover near six-month high as first-ever bitcoin futures ETF readies for launch 

Bitcoin (BTC) prices hovered around $60,700 Monday morning after breaking above the $60,000 mark for the first time since April last week. 

The jump came alongside reports that the Security and Exchange Commission was unlikely to block a new futures-based bitcoin exchange-traded fund (ETF) from launching on the New York Stock Exchange on Tuesday. ETF-provider ProShares confirmed to the New York Times on Monday that the fund will launch as planned, making it the first-ever bitcoin futures ETF on the public exchange. The ETF will offer investors exposure to bitcoin futures contracts, allowing them to bet on expected price changes rather than on the spot crypto prices themselves. 

7:35 a.m. ET Monday: Stock futures point to a lower open

Here’s where markets were trading before the opening bell Monday morning:

  • S&P 500 futures (ES=F): -10.25 points (-0.23%), to 4,452.25

  • Dow futures (YM=F): -91 points (-0.26%), to 35,080.00

  • Nasdaq futures (NQ=F): -26.50 points (-0.18%) to 15,108.00

  • Crude (CL=F): +$1.35 (+1.64%) to $83.63 a barrel

  • Gold (GC=F): -$3.90 (-0.22%) to $1,764.40 per ounce

  • 10-year Treasury (^TNX): +1.9 bps to yield 1.595%

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2021. REUTERS/Brendan McDermid

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter