Traders on the floor of the NYSE, August 4, 2022.
Stock futures plunged in overnight trading on Sunday after the S&P 500 posted its biggest weekly gain in nearly five months on weak inflation data.
Dow Jones Industrial Average futures fell 100 points. S&P 500 futures fell 0.4% and Nasdaq 100 futures traded down 0.6%.
The S&P 500 rebounded 5.9% last week for its best week since June. Investors cheered a softer-than-expected inflation reading, betting the Federal Reserve would soon wind down its aggressive tightening campaign.
“A noticeable shift has taken place in the market as investors become increasingly risky across all asset classes,” said Mark Hackett, head of investment research at Nationwide. “Technical indicators have improved significantly, with investor sentiment, momentum, extent and risk factors all showing notable improvement.”
The tech-heavy Nasdaq Composite gained 8.1% last week for its best week since March, while the blue-chip Dow rose 4.2%.
The Cboe Volatility Index, known as the Wall Street Fear Gauge or VIX, fell 1 point to 22.5, hitting the lowest level since August. The VIX, which tracks the 30-day implied volatility of the S&P 500, traded above the 30-point threshold for most of October.
Investors digested the news on the political front over the weekend. Democrats will keep control of the Senate in the 2022 midterm elections, NBC News predicted. The party will hold at least 50 seats after that senses. Arizona’s Mark Kelly and Nevada’s Catherine Cortez Masto withstood the challenges.
Meanwhile, the third quarter earnings season is expected to continue, with a strong focus on retail. Tyson Foods will report results on Monday before the bell. Major retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are all expected to report numbers this week.