Dow futures lower as investors await midterm elections and inflation report

Traders work on the floor of the New York Stock Exchange (NYSE), September 6, 2022.

Brendan McDermid | Reuters

U.S. stock futures fell slightly on Sunday as investors anticipated a week full of congressional midterm elections, as well as the latest consumer inflation report.

Dow Jones Industrial Average futures fell 31 points, or 0.1%. S&P 500 and Nasdaq 100 futures were 0.15% and 0.25% lower, respectively.

Apple shares could fall after the tech company says iPhone production has been temporarily curtailed because of Covid-19 restrictions in China.

These moves follow Friday’s rally, when the Dow Jones Industrial Average gained nearly 402 points, or 1.3%. The S&P 500 rose 1.36% and the Nasdaq Composite 1.28%. Still, the major averages ended the week with losses. The Dow Jones ended a four-week winning streak on rate hike fears.

Tuesday’s midterm elections will determine which party controls Congress and will impact the direction of future spending. Democrats currently control the House and have a majority in the Senate. A Republican sweep could signal greater support for oil and gas companies.

On the economic front, investors expect Thursday’s CPI report to provide better insight into the Federal Reserve’s efforts to crush inflation. A hot inflation report could signal to investors that a pivot from higher interest rates, for longer, may be further away than expected.

“[In] For stock and bond markets to match the post-peak inflation performance shown in the chart, inflation must continue to fall – and at a faster rate than we have yet seen. Until the Fed signals that the ‘pivot’ is near, things could remain difficult,” Baird’s Ross Mayfield wrote in a recent note.

Elsewhere, several companies are expected to report on Monday, including Palantir Technologies, ActivisionBlizzard, Lyft and Interactive Take-Two. The corporate earnings season is winding down, with the majority of S&P 500 companies reporting results.

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