U.S. stock index futures fell Monday, continuing the prior week's selloff after Friday's hot jobs report, with focus turning to several major bank earnings, and key inflation data due this week.
At 05:40 ET (10:40 GMT), Dow Jones Futures fell 145 points, or 0.4%, S&P 500 Futures dropped 48 points, or 0.8%, and Nasdaq 100 Futures slipped 250 points, or 1.2%.
The Wall Street indexes were nursing steep losses from Friday, as the stronger-than-expected nonfarm payrolls spurred increased conviction that rates will fall slowly this year.
The Federal Reserve cut interest rates by a total of 100 basis points in 2024, but the central bank signaled a much slower round of rate cuts this year, citing concerns over sticky inflation and a strong labor market.
Inflation data looms large
With a potential revival of inflation one of the key risks facing stock markets, Wednesday’s consumer price index will be closely watched.
Economists are expecting the December CPI to show a 2.9% year-over-year increase, which would be faster than the preceding month's pace of 2.7%. On a month-on-month basis, the figure is tipped to match November's reading of 0.3%.
While the Fed was confident that inflation had moderated enough to start cutting interest rates in September, the pace of annual price gains has remained above the Fed's 2% target. The Fed now projects inflation will rise 2.5% in 2025.
The central bank was also recently seen expressing some concerns over expansionary and protectionist policies under incoming President Donald Trump, which could underpin inflation and interest rates in the long term.
Trump is set to take office next week.
Bank earnings awaited this week
Investors were now looking to the fourth-quarter earnings season, which is set to begin in earnest this week with prints from several major Wall Street banks.
JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), Citigroup (NYSE:C) and Bank of New York Mellon (NYSE:BK) are due to report on Wednesday.
Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) will report on Thursday, as will major insurer Unitedhealth Group (NYSE:UNH).
Focus will be squarely on whether strength in the US economy translated into robust corporate earnings through the last quarter of 2024, even as inflation remained sticky and interest rates were relatively high.
This week’s earnings are also set to define the next leg of movement for Wall Street, as a mix of rate jitters and profit-taking at lofty valuations also battered U.S. stocks over the past month.
Crude soars on Russian sanctions
Oil prices climbed strongly Monday, continuing last week’s gains after the announcement of additional US sanctions on Russian producers and ships, potentially serving as a major logistical headwind to crude flows.
By 05:40 ET, the US crude futures (WTI) climbed 1.4% to $76.79 a barrel, while the Brent contract rose 1.5% to $80.95 a barrel.
Both contracts have risen by more than 6% since the middle of last week, when the wider sanctions on Russian oil were first mooted, before being confirmed on Friday.
The new sanctions included producers Gazprom (MCX:GAZP) Neft and Surgutneftegas, as well as almost 200 vessels that have shipped Russian oil. The moves may push China and India, the world's top and third-largest oil importers respectively, to source more crude elsewhere, boosting prices and shipping costs.
