Stocks

U.S. Stock Futures Slide After Worst Month Since 2020

U.S. stock futures edged down, signaling that the turbulence in markets may extend into May after major indexes logged their worst month since the pandemic began. 

Futures tied to the S&P 500 fell 0.3% after the broad-market index closed down 3.6% on Friday. Nasdaq-100 futures retreated 0.5%, pointing to more declines for technology stocks after the opening bell. 

Investors are awaiting the Federal Reserve’s policy meeting on Wednesday for more signals on the pace of monetary tightening, with markets anticipating another rate increase to counter the highest inflation in decades. The war in Ukraine and a Covid-19 outbreak in China threaten to further snarl supply chains and boost prices more. 

“It’s a market that is jittery and nervous,” said

Sebastien Galy,

a macro strategist at

Nordea Asset Management.


NDA.FI -1.22%

“It has been fed liquidity for a long time and this has been built into expectations for stocks,” he said, a situation that is now changing as central banks tighten monetary policy.

The S&P 500 fell 8.8% and the Dow declined nearly 5% in April, the worst monthly performance since March 2020. The Nasdaq Composite retreated more than 13% last month, its worst showing since October 2008. Tech stocks are particularly sensitive to higher interest rates. 

The yield on the benchmark 10-year Treasury note edged up to 2.914% from 2.885% on Friday, rising for a fourth consecutive trading session. The U.S. dollar held on to its recent gains, with the WSJ Dollar Index rising another 0.1% after its biggest monthly jump in a decade. 

Expedia

and

Clorox


CLX -3.28%

are scheduled to post results on Monday after markets close.

Pfizer,

KKR,

Airbnb,

Starbucks

and

Lyft

are scheduled for Tuesday, and

Moderna,

Marriott International

and Uber on Wednesday.

Kellogg

and

Apollo Global Management

are slated for Thursday.

Earnings season has been reasonably strong so far, with over 80% of companies that have reported to date beating analysts’ expectations, according to Refinitiv. Stocks fell last month despite this, due to nerves about the months ahead, investors said.

In premarket trading, shares of Moody’s slid nearly 8% after the credit rating company said its profit fell by about a third as costs rose. 

Oil prices slid. Global benchmark Brent crude fell 3.2% to trade at $103.67 a barrel. European Union officials are working on a proposal to sanction Russian energy. Some are skeptical it will pass since it requires unanimous support from EU members, many of whom rely on Russian energy, according to analysts at Nordic bank SEB. A benchmark for natural gas in Western Europe declined 3%. 

Traders are also monitoring lockdowns in China and looking ahead to a meeting of the OPEC+ alliance later this week, where members are set to discuss its supply agreement.  

The pan-continental Stoxx Europe 600 declined 1.3%. Data releases showed German retail sales fell in March, when economists expected an increase and consumer confidence in the EU declined more than expected. Wind turbine maker

Vestas Wind Systems

fell over 8% after it cut full-year guidance and reported a bigger loss than expected due to write-downs on assets in Russia and Ukraine. The U.K. stock market was closed for a holiday. 

In Asia, most major benchmarks edged down moderately. South Korea’s Kospi fell 0.3% and Japan’s Nikkei 225 declined 0.1%. Markets in China and Hong Kong were closed for the Labor Day holiday. 

Purchasing managers’ surveys by manufacturing in the U.S. in April are expected to be released by ISM at 10 a.m. 

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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