Investors are on edge as the market remains volatile following an initially calm Monday. The stock futures took another dip with investors waiting for crucial inflation data that will come out later this week, which could provide some insight into how economic conditions may be changing key perceptions about future interest rate hikes.
Futures were heavily influenced by the outlook for stocks in America. The Dow Jones Industrial Average fell 0.1% along with S&P 500 and Nasdaq 100, each taking a dip below their current values.
The markets closed with small gains yesterday as the three stock market indexes ended slightly higher. The Dow Jones Industrial Average finished at 16 points, which is less than 0.1% higher from its open price and jumped 300 points earlier in trading before that day’s end.
Indexes were on a tear this morning, with the 10-year Treasury yield spiking to 3% and indexing itself for its highest level in over 30 days.
Investors are eagerly awaiting any sign that the recent volatility in stocks may be coming to an end. The blackout period on Monday means there will not be any economic data releases or earnings reports from major companies, but some investors believe this could give way for a bear market rally if it proves long enough without significant news causing another sell-off again soon after prevention of further gains.
The President at Yardeni Research, a sell-side consultancy that provides global investment and business strategy services said:
“Since the beginning of the year, we’re seeing an altitude sickness when you look at the valuation multiple,” he shared. “To a large extent, clearly, with the benefit of hindsight, the market was overvalued. A lot of that was in the negative cap seat, big-cap names, related companies. I think we’ve seen a tremendous correction in that area. And now the question is whether the market can accept the kind of earnings expectations that analysts are delivering and whether those expectations will be correct.”
Investors will be paying close attention to company earnings this week. For example, Cracker Barrel is scheduled to release its results on Tuesday along with JM Smucker and United Natural Foods.
Investors are eagerly awaiting this month’s consumer price index reading to see if inflation has peaked. The number will be released on Friday, and some experts believe it could provide us with an indication as far as where prices may go from here in terms of growth rates or levels for the economy overall.