U.S. stock futures were near breakeven ahead of overnight trading Monday following a down day on Wall Street marked by worries of an economic slowdown as war in Ukraine, COVID-19 lockdowns in China and the prospect of a more aggressive Federal Reserve continued to weigh on sentiment. Investors also looked ahead to the start of earnings season and a batch of economic data due out this week.
Contracts on Wall Street’s main benchmarks inched up slightly but hovered near the flatline after markets started the holiday-shortened trading week in the red. The S&P 500 declined by 1.7% in the main session and added to last week’s losses, and the Nasdaq dropped more than 2% as technology stocks came under renewed pressure. Treasury yields climbed, and the benchmark 10-year yield rose above 2.7% to reach the highest level since January 2019.
Markets will turn their attention to the latest gauge on inflation in the U.S., with the release of a new print from the Bureau of Labor Statistics’ (BLS) on its closely-watched Consumer Price Index (CPI). March figures are expected to come in red hot again as supply chain snarls continue to flare up prices, particularly with Russia’s war in Ukraine pressuring flows of global energy and commodities.
Consensus economists anticipate headline CPI will again accelerate to show an 8.4% year-over-year increase, surging higher from February’s 7.9% rise, according to Bloomberg consensus data.
The print is due out as investors grapple with the likelihood Fed officials will act more aggressively to combat inflation after a hawkish readout of minutes last week from the central bank’s March meeting suggested “many” policymakers “would have preferred a 50 basis point increase” in benchmark interest rates last month.
“I think the Fed is already committed to an aggressive rate hike outlook,” Charles Schwab Chief global investment strategist Jeffrey Kleintop told Yahoo Finance Live on Monday. Tuesday’s CPI data “may not have as much impact [on the markets] as it might’ve, say, a few months ago.”
Although investors are largely prepared for the likelihood Fed policymakers will be more combative in their inflation-fighting efforts, worries have emerged that a ramp up in monetary tightening may cause an economic contraction. Strategists have begun to discuss the possibility of a recession more widely in recent weeks, notably with economists at Deutsche Bank recently warning central bank measures could materially slow growth in the second half of 2023.
Some have said it’s too early to make such a call but that the possibility is on the table.
“I would say that it’s probably closer to a coin toss that the economy will be moving into recession by the end of the year,” said Dreyfus and Mellon Chief economist and macro strategist Vince Reinhart on Yahoo Finance Live.
6:10 p.m. ET: Stock futures little change ahead of Tuesday’s inflation data
Here’s where markets were trading ahead of the overnight session on Monday:
S&P 500 futures (ES=F): +2.75 points (+0.06%) to 4,411.75
Dow futures (YM=F): +29.00 points (+0.08%) to 34,248.00
Nasdaq futures (NQ=F): +9.75 points (+0.07%) to 14,009.75
Crude (CL=F): +$0.97 (+1.03%) to $95.26 a barrel
Gold (GC=F): +$9.30 (+0.48%) to $1,957.50 per ounce
10-year Treasury (^TNX): +6.7 bps to yield 2.7800%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc