US Stock Futures Fall Ahead of May’s 0.5% Interest Rate Hike

Anticipating a 0.5% interest rate hike this May, US stock futures fell over the weekend. In particular, the Dow Jones Industrial average is in the midst of a four-week losing streak. The markets are in flux as the Federal Reserve will implement a 0.5% rate hike next month.

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US Stock Futures Fall Over The Weekend

US stock futures fell Sunday night even as Wall Street braces for a big week of earnings announcements. Major tech stock companies such as Amazon and Apple are set to disclose their quarterly reports later this week.

The Dow Jones Industrial Average futures lost 36 points or 0.1%. In addition, the S&P 500 futures fell  0.2% while 100 futures declined 0.2%.

The slight drop in the value of US stock futures follows a brutal selloff last Friday, The Dow dropped 981.36 points or 2.8% to 33,811.40. This was the Dow’s worst-performing day since October 2020.

The S&P 500 also fell by 2.8% as well, sliding down to 4,271.78 on its worst day since March. Finally, the Nasdaq Composite dropped 2.6% and settled down at 12,839.29.

For the week, the Dow went down 1.9% lower, its fourth straight decline. Meanwhile, the S&P 500 and Nasdaq fell by 2.8% and 3.8% respectively. The two are now on their third straight week of losses.  

As US Stock Futures Fall, Investors Moving To The Defensive

Jonathan Krinsky, BTIG’s chief market technician, noted that investors are shifting their bets. “There has been severe damage in many areas of the market,” he said.

Krinsky added that “money rotated into perceived ‘defensives’ like Utilities, Staples, Pharma, and even mega-cap growth. Those areas, despite their strong momentum, are now unwinding lower, while the low-momentum names continue to trend down.”

Among the stocks to watch out for is Twitter. Last week, Tesla CEO Elon Musk said that he secured funding for a takeover of Twitter worth $46.5 billion.

This led shareholders to insist that the board examine the deal if it makes sense. Over the weekend, Twitter went up by nearly 4% to close at $48.93.

Musk’s bid, when approved, means that shareholders will receive a premium price of $54.20 per share. 

Busy Week for Corporate Earnings Calls

In addition, Wall Street is bracing for a slew of earnings calls among America’s top tech companies. All eyes will focus on the upcoming reports from heavyweights such as Amazon, Apple, Alphabet, Meta Platforms, and Microsoft.

Video game maker Activision Blizzard will also make its quarterly report this Monday. Meanwhile, some of the more traditional companies set to share their quarterly earnings are Coca-Cola, Otis, Whirlpool, and Zions Bancorp. 

Investors are also waiting for a key inflation-related report this week. The Personal Consumer Expenditures Index will also come out this Friday. For February, the core PCE jumped 5.45%. 

Year on year, the PCE climbed 6.4%, which is the steepest increase since February 1982. In January, the PCE rose by a revised 6.0%. 

Watch the Stock Market Pro video discussing an upcoming Stock Market Crash: How to Win When Stocks Go Down:

Are we heading toward a bear market?

Please Select One:

• Yes. Expect stocks to go up for a short while before they come crashing down.
• Yes. It’s been a long, good run for over two years. However, what goes up must come down.
• Yes. Interest rates will go up again next month. Growth stocks are about to slow down.
• No. The US economy remains strong.

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What do you think of the current drop in US stock futures? Is this an early sign of a growing bear market? Or, will things get even worse as the Federal Reserve raises interest rates by 0.5% next month?

Tell us what you think. Share your thoughts in the comments section below.