Futures contracts linked to major US stock indices fell early Monday, suggesting Wall Street could see subdued trading after hitting new records last week.
Dow futures implied an opening loss of around 70 points, while contracts linked to the S&P 500 lost 0.2%. Nasdaq 100 futures lost 0.3%.
Reopening games fell slightly early in the day of trading, with Carnival and Gap stocks falling about 1% on the pre-market. United Airlines fell about 1% after the airline announced that first-quarter revenue is expected to decrease 66% year over year. The new guidelines are near the top of the 65% to 70% range that the company had previously forecast.
Nuance Communications shares rose 21% in early trading after Microsoft announced it would buy the $ 16 billion voice recognition company. The Nuance acquisition is Microsoft’s largest acquisition since purchasing LinkedIn for more than $ 26 billion in 2016.
Tesla was up 1.5% to $ 687.01 in early trading after Canaccord Genuity upgraded the stock to buy and raised its price target to $ 1,071 citing its battery innovations.
The move in the futures market followed another record close for the Dow Jones Industrial Average on Friday when it jumped nearly 300 points and ended at 33,800.60. The S&P 500 gained 0.8% and reached its third record in a row.
Stocks linked to the recovering economy drove many gains over the past week as vaccination efforts accelerated in the US. Both the Dow and S&P 500 were up at least 2% last week. The Nasdaq was up 3.1% over the same period as some traders snapped up big tech names.
The earnings reporting season for the first quarter kicks off this week with expectations for generally positive news and an uptrend for US stocks thanks to a recovering economy. Many of the country’s largest banks, including Goldman Sachs and JPMorgan Chase, will be releasing results for the three months ended March 31 this week.
The week ahead is also filled with Fed speeches and key economic data, including a highly anticipated inflation reading on Tuesday, when the US consumer price index is released.
Central bank chairman Jerome Powell kicked off the week of several Fed appearances with an interview that aired on CBS News on “60 Minutes” on Sunday evening.
During the interview, Powell reiterated that the Fed would like inflation to rise above 2% for an extended period of time before officials hike rates.
“We want inflation to rise to 2% – and we mean that we don’t just tap the base once on a sustainable basis,” he said. “But then we also want it to be on the right track to move moderately above 2% for a while.”
He added that the U.S. economy appears to be at a turning point amid an accelerated rollout of Covid-19 vaccines and strong tax support. “What we are seeing now is really an economy that appears to be at a tipping point,” he said.
Powell will also speak at an Economic Club of Washington event on Wednesday.
Investors will also be keeping an eye on President Joe Biden’s efforts to advance an important infrastructure proposal known as the American Jobs Plan. Biden, who along with fellow Democrats has promised a major infrastructure overhaul in the 2020 election, will meet with a bipartisan group of lawmakers Monday to convince Capitol Hill to support the $ 2 trillion package.
Congress will return to Washington this week and hold its proposal for the first time since Biden’s proposal, which will allocate hundreds of billions of dollars to roads, bridges, airports, broadband, electric vehicles, housing and vocational training.
“A positive fiscal shock, a strong real estate tailwind, a large stock of savings and the Fed pushing inflation above 2% mark a fundamentally different economic backdrop,” Evercore ISI equity strategist Dennis DeBusschere wrote in an email. “The US data is expected to be strong this week and US vaccinations to increase. Real rates are still too negative and rising, which supports the risk factor’s outperformance.”
The president’s plan would also raise the corporate tax rate to 28% and put in place other overseas tax avoidance strategies.
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