U.S. stock index futures were down in the early hours of trading on Monday following the S&P reported its highest week in 2022 which was boosted by quarterly earnings data and an employment report that was better than expected in January.
Futures contracts that are tied with the Dow Jones Industrial Average shed 0.1 percent. S&P 500 futures fell just below the flatline, whereas Nasdaq 100 futures remained marginally higher.
The S&P and Nasdaq Composite advanced on Friday for their fifth session of positive performance in the last six weeks, and both indices posted their highest month since the end of December. The Dow dropped 0.06 percent on Friday, however, it still posted 1.05 percentage gains over the course of the week. The Russell 2,000 also posted its first week of positive performance in five years and its most successful week in 2022.
Earnings data and a stronger than anticipated January jobs report drove the major averages up. According to the Labor Department said Friday that 467,000 new jobs were created in January, far above the 150,000 economists surveyed 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 a confirmation to investors that rate hikes are imminent, with the first occurring in the March meeting.”
The gains last week follow an unforgiving beginning to the year for the major averages, as rising rates caused investors to rethink their growth-oriented names and instead invest in high-value areas of the market.
So far, 56 percent of S&P 500 companies have reported quarterly earnings and 79% have beaten expectations for earnings and 77% exceeded revenue estimates.
The individual performance of each has been different, However. Amazon shares gained 13.5 percent on Friday, while Snap increased 58.8 percent. Facebook’s parent company Meta fell by 26% Thursday, following their quarterly report. The social media giant is coming off its most difficult week in history.
“Overall investors continue to ‘sell the news,’ ” Wells Fargo said Friday in an email to its clients. “We are now getting further behind on the cycle. Markets are becoming increasingly specific. The tide won’t lift all boats, and the market will be less and less accommodating.”
The firm stated that in the future, investors must reduce losses as quickly as possible, and concentrate on the company’s margins instead of their bottom line or top line.
Another week of earnings will be in the cards with the 76 S&P 500 companies expected to release their results. Three Dow components will release quarterly updates, which include Disney as well as Coca-Cola. Amgen, Take-Two Interactive, and On Semiconductor are among the companies expected to report their earnings on Monday.
In the coming week the market will be monitoring crucial inflation data, including the index for consumer prices on Thursday, and then U.M.’s Consumer Sentiment survey on Friday.