May 28, 2024


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Stock futures drop amid COVID restrictions in China, packed earnings week

Stock futures drop amid COVID restrictions in China, packed earnings week

US stocks fell on Monday after global stocks fell, as concerns about the escalating COVID outbreak in China heightened concern about US economic growth in the face of rising inflation and tight monetary policy.

The S&P 500 fell nearly 1% right after the opening bell as the The index appears to be adding to last week’s losses. The Dow and Nasdaq also fell. US Treasury yields fell, and the benchmark 10-year yield hovered above 2.8%.

West Texas Intermediate crude futures fell more than 4% to trade below $98 a barrel, as concerns mount over the economic impact of expanding virus-related restrictions across China. Beijing saw a spike in COVID cases over the weekend which led to more mandatory testing and some lockdowns in the region. It came as other densely populated cities, including Shanghai, recently also grappled with new waves of infections, even as the country worked to stamp out the virus under a COVID-free policy.

In a note published last week, Bank of America economist Helen Qiao lowered her GDP growth forecast for China to 4.2% from 4.8% for 2022 as the number of lockdowns increased across the country.

“The COVID-19 lockdowns and restrictions in Shanghai and neighboring cities are not only hurting domestic demand, but also causing logistical disruptions and widespread supply chain disruptions within and outside the region,” Qiao wrote in the note published on April 19. The opinion is, even if these control measures are eventually rolled back and economic activities will gradually normalize by the middle of the year, the heavy burden on growth already seems inevitable.”

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Meanwhile, investors were also grappling with assurances from Federal Reserve officials last week that the central bank would take a tough line on curbing inflation. Federal Reserve Chairman Jerome Powell Beside San Francisco Fed President Mary Daly It was among the latest indications that they saw the case for a 50 basis point rate hike this year. These larger-than-normal increases would weigh on the Fed’s monetary policy response to inflation in the near term.

“Mr. Powell once again highlighted the Fed’s focus on higher rates and the need for policy to move toward neutrality to restore price stability. His comments largely confirm market expectations for a 50 basis point hike at the May 3-4 FOMC meeting, which would be the move The first of its kind since 2000, Rubella Farooqui, chief US economist at High Frequency Economics, wrote in a note. “While Mr. Powell did not comment on the course of policy after the Federal Open Market Committee meeting in May, other Fed officials — including That’s San Francisco President Daly and Chicago President Evans – some 50 basis point increases are possible this year. “

Although Federal Reserve officials are having a quiet period this week ahead of next week’s central bank meeting, a packed slate of corporate earnings results will catch investors’ attention. In the coming days, a group of major companies and stock index components will publish results, including Alphabet (The Google), meta pads (FB), apple (AAPLand amazonAMZN).

As of Friday, about five S&P 500 companies reported their actual first-quarter results. Of those, 79% beat Wall Street earnings estimates, while 69% beat sales expectations, according to data from John Butters, chief earnings analyst at FactSet. Potters noted that the expected earnings growth rate for the index was 6.6% as this week approaches, which, if it continues through the end of the reporting season, will be the slowest growth rate since the fourth quarter of 2020.

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9:31AM ET: Stocks open lower

Here’s where the shares traded after the opening bell Monday morning:

7:13 a.m. ET: Coca-Cola beats expectations for the first quarter

Coca-Cola (KO) Reports First Quarter Sales and Earnings That beat Wall Street estimates, with broad growth across the beverage giant’s portfolio of brands helping drive results.

Adjusted operating revenue grew 16% year-over-year to $10.5 billion, topping a consensus forecast of $9.8 billion, according to Bloomberg data. Company-wide unit case size — a closely watched metric for Coca-Cola — was up 8%, and growth was most notable for the Nutrition, Juice, Dairy, and Plant Beverage segment, where unit case size increased 12%. In the bottom line, comparable earnings per share came in at 64 cents, versus 58 cents expected.

For the full year, Coca-Cola said it expects commodity price inflation to be in the medium single-digit percentages. It also forecast that the suspension of its Russia business will have a 1% impact on unit issue volume for the full year, and a 1-2% impact on net revenue and operating income.

7:06AM ET: Stock futures slipped, adding to last week’s losses

Here’s where the stocks are trading Monday morning:

  • S&P 500 futures contracts (ES = F.): -36.25 (-0.85%) to 4,231.00

  • Dow futures contractsYM = F.): -270 (-0.8%) to 33458.00

  • Nasdaq futures contractsNQ = F.): -106.75 (-0.8%) to 13246.75

  • raw (CL = F.):- $4.73 (-4.63%) to $97.34

  • He went (GC = F.): – USD 23.10 (-1.19%) to USD 1,911.20 per ounce

  • Treasury for 10 years (^ degeneration): -6.9 basis points to produce 2.837%

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NEW YORK, NY – MARCH 30: Traders work on the floor of the New York Stock Exchange on March 30, 2022 in New York City. US stocks opened lower after rising at the start of the week. (Photo by Michael M. Santiago/Getty Images)

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

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