The U.S. stock futures were trading in the green zone in the early morning hours of Monday, as investors welcomed a new month after a tumultuous April.
Futures contracts tied to the Dow Jones Industrial Average (DJIA) were up 0.51%, while those on the S&P 500 (SPX) moved 0.53% higher, as of 6.51 a.m. EST, Monday. Meanwhile, the Nasdaq 100 (NDX) futures gained 0.67%.
April was a bad month for the Nasdaq Composite Index, the worst since 2008, actually. The Fed’s interest rate hike, inflation, supply chain constraints, and disappointing earnings from some of the biggest names in technology was detrimental to the tech sector, and in turn, the tech-heavy Nasdaq Composite.
By the end of the regular trading hours of Friday, the S&P 500 sank 3.63%. The Dow declined 2.77%, marking its fifth straight week of losses. Meanwhile, the Nasdaq 100 nosedived 4.47%, as the market turned increasingly bearish without any bull props in sight.
Despite all the turmoil, investors had pinned their last vestiges of hope on the quarterly earnings. However, many of those tanked as well, with behemoths like Amazon (AMZN), Netflix (NFLX), and Meta Platforms (FB) reporting worse-than expected financials.
Weak financial guidance and tepid business outlooks from the largest companies are making investors jittery.
Nonetheless, investors are looking forward to Wednesday, as the Fed is expected to execute its second rate hike of the year, possibly of 50 basis points. More updates about the monetary policy will be shared, giving investors clearer insight into what to expect from the market.
Notably, monetary policy decisions taken during the pandemic to provide a stimulus to the markets had led to an accumulation of $9 trillion worth of the U.S. government’s asset portfolio, comprising mostly of Treasury and mortgage securities. The high inflation that has gripped the economy presently prompted the Fed to gradually and tactfully shrink these holdings. On Wednesday, we will have more clarity on how quickly the Fed will shrink its balance sheet.
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