U.S. stocks plummeted Monday as investors look forward to the start of a corporate profit season this week and a plethora of new economic data as the Federal Reserve prepares to accelerate its anti-inflation measures.
The S&P 500 fell 0.61% and added to last week's losses just after the opening bell. Nasdaq is down by 1% as technology stocks come under renewed pressure. The Treasury yield has increased, and the 10-year average yield has increased by more than 2.7% to reach the highest level since January 2019.
Concerns about inflation, inflation during the Russian war in Ukraine, and the Federal Reserve's monetary policy stance have always been a source of concern for investors. On Tuesday, traders are set to receive the latest Consumer Price Index from the Bureau of Labor Statistics, which is expected to show a dramatic 8.4% year-on-year increase in the highest rate since 1982. And this comes as Fed officials have been talking more about the 50-point interest rate hike this year to help lower inflation. Last week, minutes of the March Fed meeting also showed that the central bank was preparing to start removing assets from its $ 9 billion balance sheet, by continually removing financial market support and evading residential policy outbreaks.
"Considering the recent comparable cycles, I think by 2018, 2019, the Fed has been raising interest rates and losing their balance. That should sound familiar," Seth Carpenter, an international economist on Friday. "But at the end of 2018, risky markets began to break down and the Fed postponed the course very quickly."
"The main difference now between the two episodes is trying to reduce inflation. They are not trying to stop it from going up," he added. "And that means they're trying to slow the U.S. economy down."
Meanwhile, the start of the latest quarterly earnings for companies this week will help show how each company is coping with inflationary pressures and the outlook for slowdown in economic growth. As of Friday, Wall Street analysts expect earnings for the S&P 500 to grow by 4.5% in the first quarter of last year, according to FactSet data. If it appears, this will mark a slowdown in the fourth quarter of 2020.
"Guidelines and management comments will be the most important source of information for this quarter given the uncertainty of future benefits," David Kostin, chief executive of Goldman Sachs of the US equity Strategist, wrote in a paper on Monday. "In line with previous sections, guidance has recently become a major difference in stock performance."
11:30 a.m. ET: Expecting inflation for U.S. consumers rising steadily in March: New York Fed
U.S. consumers are now looking for a more significant increase in prices next year than previously expected, according to a new study from the New York Federal Reserve released Monday.
Consumers expect inflation to rise by 6.6% next year, according to the New York Fed, which represents the fastest-growing rate since the study began in 2013.
At the time, only 23% of respondents believed that their funding would improve next year, and this proportion was also the lowest mark since the survey was launched in 2013.
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9:30 a.m. ET: Stocks kick off the week lower
Here were the main moves in markets as of 9:30 a.m. ET:
7:13 a.m. ET: Twitter shares dip after Musk decides not to join board
Twitter shares (TWTR) plummeted Monday morning, returning some of last week's profits after Tesla CEO Elon Musk chose not to join the communications company board after taking more than 9% stake.
"Elon's appointment to the board was due to take effect on 4/9, but Elon shared that morning that he would no longer be able to join the board. I believe this is the best thing to do," Twitter CEO Parag Agrawal tweeted Monday. "We have and will always appreciate what comes from our shareholders whether they are on our Board or not. Elon is our chief shareholder and we will always be open to include him."
"There will be interruptions in the future, but our goals and priorities have not changed," Agrawal said. "The decisions we make and the way we make them are in our hands, no one else."
7:07 a.m. ET Monday: Stock futures head for a lower open
Here's where markets were trading Monday morning before the opening bell:
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