Monday April 25th


Dow futures fall about 200 points as the April sell-off in markets continues

U.S. stock index futures fell on Monday, pointing to a continuation of an April market sell-off that has pushed the Dow Jones Industrial Average lower for four-straight weeks. Fear about a global economic slowdown loomed as Asian stock markets cratered Monday amid concerns about Covid case spikes in China. Oil prices declined and yields retreated on the fears. Wall Street is also bracing for a stacked week of earnings, including reports from major technology companies like Amazon and Apple. Dow futures lost about 170 points, or 0.5%. S&P 500 futures dipped 0.5%, and Nasdaq 100 futures declined 0.4%. The Dow posted its worst one-day performance since October 2020 on Friday, dropping more than 900 points and pushing the average to its fourth straight weekly loss. For the week, the S&P 500 and the Nasdaq dropped 2.8% and 3.8% respectively, posting their third straight weekly declines. “Stocks are kicking off the week deeply in the red as all the anxiety and negativity from Thurs/Fri carried over the weekend,” wrote Adam Crisafulli of Vital Knowledge in a note to clients. “The dramatic shift in [central bank] tightening expectations last week remains a huge overhang, but China is quickly rising the top of the list of market fears as COVID shutdown concerns spread to Beijing.” After a late March comeback, stocks returned to their losing ways in April. The Nasdaq Composite is down nearly 10% for the month while the S&P 500 and Dow are off by 5.7% and 2.5% respectively. The S&P 500 is back in correction territory, down 11% from its high. The Nasdaq is off by more than 20% from its record. About 160 companies in the S&P 500 are expected to report earnings this week, and all eyes will be on reports from mega-cap tech names, including Amazon, Apple, Google-parent Alphabet, Meta Platforms and Microsoft. “This week may easily be a fork in the road of equities. We have nearly a third of the S&P 500 and half of the Dow Jones set to report. Bottom-up drivers will either confirm or reject what the challenging macro backdrop has given us over the last three weeks,” MKM’s JC O’Hara said in a note. Coca-Cola reported better-than-expected quarterly earnings before the bell Monday and shares rose about 2% in the premarket. Investors are watching Twitter as well, which reportedly is re-examining Elon Musk’s takeover bid. The social media company is nearing a deal to sell itself to the billionaire investor, The New York Times reported, citing unnamed sources. Twitter shares were more than 4% higher in the premarket. Energy and commodity-related stocks dropped in premarket trading as oil prices pulled back. Mainland Chinese indexes led losses as Asia-Pacific markets fell sharply on Monday following a sell-off on Wall Street on Friday. The Shenzhen component tumbled 6.08% to 10,379.28 while the Shanghai composite declined 5.13% to 2,928.51. Hong Kong’s Hang Seng index fell 3.57% in late trade as the Hang Seng Tech index dropped 4.43%. Japan’s Nikkei 225′s slipped 1.9% to 26,590.78, while the Topix declined 1.5% to 1,876.52. In South Korea, the Kospi slid 1.76% to 2,657.13 and the Kosdaq was down 2.49% at 899.84. Oil slumped to the lowest in almost two weeks on Monday, extending last week’s decline as concern grew that prolonged Covid-19 lockdowns in Shanghai and potential increases to U.S. interest rates would hurt global growth and oil demand. In Shanghai, authorities have erected fences outside residential buildings, sparking fresh public outcry. In Beijing many have begun stockpiling food, fearing a similar lockdown after the emergence of a few cases. “It seems that China is the elephant in the room,” said Jeffrey Halley, analyst at brokerage OANDA. “The tightening COVID-zero restrictions in Shanghai, and fears Omicron has spread in Beijing, torpedoed sentiment today.” Brent crude was down $4.33, or 4%, at $102.31 a barrel and touched $101.20 earlier in the session, the lowest since April 12. U.S. West Texas Intermediate (WTI) crude fell $4.26, or 4.2%, to $97.81 per barrel. Gold prices slipped to their lowest in four weeks on Monday as prospects of aggressive policy tightening by the U.S. Federal Reserve and a stronger dollar dented the precious metal’s appeal. Spot gold fell 0.7% to $1,916.17 per ounce by 0922 GMT, earlier hitting its lowest since March 29 at $1,911.80. U.S. gold futures were 0.9% lower at $1,917.60. “It seems that the fears about rate hikes have gotten the upper hand as of late,” said Julius Baer analyst Carsten Menke.