As Wall Street enters Monday, the US stock market faces considerable uncertainty following a tumultuous week. The Dow Jones Industrial Average futures have fallen by about 500 points, or 1.4%, reflecting continued investor anxiety.
Similarly, S&P 500 futures are down by 2.2%, and Nasdaq-100 futures have slid by 3.5%. These declines come after a volatile week that saw the Nasdaq Composite drop into correction territory, marking a significant downturn from its previous record highs.
The past week has been challenging for major US stock indices. The Nasdaq Composite ended the week with a loss of over 10% from its recent peak, marking its third consecutive week of declines. The S&P 500 also experienced a third week of losses, down by 2% for the week. Even the Dow Jones, which had previously shown strong performance, ended a four-week winning streak with a 2% drop.
In Asia, the market turmoil has spread, with Japan’s Nikkei index entering a bear market. The Nikkei suffered a 12.4% loss, its most significant decline since the 1987 “Black Monday.” This steep drop reflects a broader sell-off across the Asia-Pacific region, impacting investor sentiment globally.
Economic Indicators and Market Reactions
The recent pullback in the stock market was intensified by a disappointing jobs report, which raised concerns about the Federal Reserve’s recent decision to maintain interest rates.
The data suggested potential weaknesses in the economy, fuelling fears of a possible recession. Consequently, US Treasury yields fell sharply, with the benchmark 10-year note yielding 3.79%, down from 4.20% the previous week.
Keith Lerner, Co-Chief Investment Officer at Truist Wealth, suggested that while the current period appears corrective, the underlying bull market trend remains intact. He indicated that it might take some time for the market to navigate through this period of increased volatility.
Key Data and Events to Watch
As we move into the new week, investors will be focusing on several key economic reports and corporate earnings announcements.
On Monday, several important data points will be released, including the Services Sector Purchasing Managers’ Index (PMI) and the ISM Services Index for July. These reports will provide insights into the performance of the services sector, which is crucial for understanding broader economic trends.
Federal Reserve officials will also be speaking this week, with San Francisco Fed President Mary Daly scheduled to deliver remarks on Monday. Her comments on monetary policy could influence market expectations and investor sentiment. Additionally, Richmond Fed President Tom Barkin will speak on Thursday, offering further insights into the Fed’s economic outlook.
Earnings Reports to Watch
Earnings season is winding down, but several significant companies will report their financial results this week. On Monday, Palantir Technologies will provide an update on its quarterly performance. Investors will be keen to see if Palantir can continue to show growth through its artificial intelligence (AI) platforms.
Uber Technologies is set to report its earnings on Tuesday, following a surprise first-quarter loss. Analysts will be watching closely to see how the company addresses its recent financial challenges. Walt Disney will also report on Wednesday, with expectations of a profitable quarter, bolstered by growth in its experiences segment and recent success in its direct-to-consumer business.
Pharmaceutical companies will be in the spotlight as well. Eli Lilly is expected to report on Thursday, with a focus on its performance in the weight-loss drug market. Gilead Sciences will also provide an update, following positive results in a recent HIV treatment study.
The US stock market faces a challenging environment marked by significant recent losses and ongoing economic uncertainties. Investors will need to pay close attention to upcoming economic data and corporate earnings reports for clues on the market’s future direction.
With key reports and speeches scheduled, this week will be crucial for shaping market expectations and navigating the current volatility.
