Market Snapshot: U.S. stock futures tumble as China COVID concerns add to worries over Fed’s rate-hike pace

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U.S. stock futures were signaling losses for Wall Street on Monday, as investors juggled concerns over the pace of Federal Reserve rate hikes with news of more lockdowns in China as COVID cases rise.

How are stock-index futures trading?
  • S&P 500 futures ES00, -0.83% dropped 33 points, or 0.8%, to 4,233
  • Dow Jones Industrial Average YM00, -0.80% fell 223 points, or 0.7%, to 33,508
  • Nasdaq-100 futures NQ00, -0.68% fell 73 points, or 0.6%, to 13,280

On Friday, the Dow industrials DJIA, -2.82% shed about 981 points, or 2.8%, to 33,811.40, marking its worst daily percentage drop since Oct. 28, 2020, according to Dow Jones Market data. The index declined 1,019 points at its session low. The S&P 500 index  SPX, -2.77% slid 2.8% to end at 4,271.78 and the Nasdaq Composite Index  COMP, -2.55% tumbled 2.6% at 12,839.29.

For the week, the Dow was down 1.9%, the S&P 500 fell 2.8% and the Nasdaq dropped 3.8%, according to FactSet.

What’s driving the markets?

Following the end week meltdown, stock futures began tumbling on Sunday evening, as news of fresh COVID lockdowns in China added to worries for already jittery investors.

Beijing began testing millions of residents and shutting down business districts and some residential areas on Monday amid a spike in infections. Millions in Shanghai remain under restrictions as that financial hub has struggled with rising infections.

“More lockdowns reduce demand for commodities in the short-term which is an easing factor for commodity inflation, but lockdowns also create bottlenecks in the world’s factory which causes more delays and potentially inflation in consumer markets in the U.S. and Europe,” strategists at Saxo Bank told clients in a note.

China’s CSI 300 000300, -4.94% slumped 4.9% to 3,814, its weakest close since April 2020, while a host of commodities were also hit hard. Steel and iron ore futures tumbled in Asia and U.S. and Brent crude prices were down over 4% each.

Investors piled into bonds, with the yield on the 10-year Treasury note TMUBMUSD10Y, 2.837% dropping 8 basis points to 2.821% and the ICE Dollar Index DXY, +0.41%, up 0.29%, which helped push gold GC00, -0.83% down 0.8% to $1,918 an ounce.

Markets are facing a busy week on the economic front, as the Fed is now in a blackout period ahead of the May 3-4 Federal Open Market Committee meeting. The March core personal-consumption expenditures price index, the central bank’s favored inflation indicator, is due Friday. The data calendar is empty for Monday.

Wall Street is also bracing for a busy earnings week, with quarterly reports due from Apple AAPL, -2.78%,  Facebook parent Meta Platforms Inc. FB, -2.11%,  Google parent Alphabet Inc. GOOGL, -4.15%,  Amazon.com Inc.  AMZN, -2.66% and Microsoft Corp.  MSFT, -2.41%,  among others.

“As technology companies are the biggest constituents in the main indices, it’s crucial how these companies perform on earnings this week, but also that they can demonstrate less impact from inflation,” added Saxo strategists.

Investors will also keep an eye on Twitter Inc.  TWTR, +3.93%,  which reports earnings Thursday and on Sunday was reported to be re-evaluating Elon Musk’s takeover bid.

European stocks also tumbled Monday, getting no lift from news French President Emmanuel Macron was elected for a second term, defeating far-right challenger Marine Le Pen.

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Mike Murphy contributed to this article

This article was originally published by Marketwatch.com. Read the original article here.

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