May 26, 2022

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Stock futures stabilized after the Standard & Poor’s 500 posted its third consecutive week of gains

Stock futures stabilized after the Standard & Poor's 500 posted its third consecutive week of gains

Traders on the floor of the New York Stock Exchange, March 25, 2022.

Source: NYSE

US stock index futures were flat during overnight trading on Sunday, after the S&P 500 posted its third straight week of gains.

Futures related to the Dow Jones Industrial Average fell 14 points. S&P 500 futures were flat, while Nasdaq 100 futures were down 0.14%.

Stocks advanced on Friday — the first day of the second quarter — with the Dow and Standard & Poor’s gaining 0.4% and 0.34%, respectively. The Nasdaq Composite rose 0.29% and also ended the week higher.

Meanwhile, the Dow Jones snapped a two-week winning streak, dropping 0.12%.

Friday’s positive session came despite the March employment report, which came in below economists’ estimates. The US economy added 431,000 jobs during the month, while Dow Jones estimates 490,000 jobs.

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Peter Essely, Head of Portfolio Management for Commonwealth Financial Network, noted that “strong gains on the employment front continue to signal the green light for investors despite multi-decade inflation, concerns about higher rates and Fed tightening.” “The economy appears to be in a speed-out mode, and the only concern is the amount of employment available to support a strong recovery,” he added.

An often-cited recession signal was triggered Thursday night when the two- and 10-year Treasury yields flipped for the first time since 2019.

“We believe the current stability is due to concern that the Fed is behind the curve on rallies and will tighten policy beyond neutrality, which will hurt growth,” TD Securities said in a note to clients.

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Investors are also watching the latest developments in Ukraine. German Chancellor Olaf Schulz said on Sunday that Western countries will impose additional sanctions on Russia in the coming days.

“The stock and bond markets continued to send mixed signals about the economic outlook,” UBS said in a recent note to clients. “We caution against over-interpreting either signal. Yield curve swings have historically predicted long and uncertain recessions, while hopes for ceasefire talks have subsided and ebbed,” the company added.

On Wednesday, the Federal Open Market Committee will publish the minutes of the central bank’s March meeting, giving investors a deeper understanding of how the Fed views market conditions.