U.S. Stock Futures Slip as Megacap Corporate Earnings Soar

Market Overview

The U.S. stock futures experienced a slight decline on Monday, taking a step back after impressive earnings from megacap corporations led to a fresh record high.

Dow Jones Industrial Average

• Dow Jones Industrial Average futures (YM00) fell by 124 points, or 0.3%, to 38,641.

S&P 500

• S&P 500 futures (ES00) dropped 13 points, or 0.3%, to 4,968.

Nasdaq-100

• Nasdaq-100 futures (NQ00) decreased by 38 points, or 0.2%, to 17,695.

Friday’s Performance

On Friday, the Dow Jones Industrial Average (DJIA) rose by 135 points, or 0.35%, reaching 38,654. The S&P 500 (SPX) increased by 52 points, or 1.07%, reaching 4,959, while the Nasdaq Composite (COMP) gained 267 points, or 1.74%, reaching 15,629. Impressive results from Meta Platforms and Amazon.com greatly contributed to the S&P 500 achieving its seventh record close of the year.

Strong Jobs Report Impact

Friday also saw the release of the payrolls data, which revealed an unexpectedly strong creation of 353,000 jobs in January. Despite the weakness in the bond market triggered by the jobs report, U.S. stocks still climbed higher. This highlights the market’s focus on earnings, according to Mike Wilson, Morgan Stanley’s chief U.S. equity strategist.

“We see quality growth continuing to outperform amid strong earnings revisions, particularly relative to lower quality cyclicals and small caps. For now, the internals of the stock market are suggestive of the idea that a stickier rate backdrop is a disproportionate headwind for stocks with poor balance sheets and a lack of pricing power—i.e., lower quality cyclicals and many areas of small caps,” he said.

Fed Chair’s Stance

During his appearance on the 60 Minutes program, Federal Reserve Chair Jerome Powell reaffirmed that the central bank has no plans to cut rates in March.

Upcoming Economic Data

There is more economic data to look forward to, including the ISM services report. Last month, this report triggered concerns about the economy due to an unusually low reading for the employment component.