Stocks Slip to a 4-Week Low, Dow Futures Slide Over 400 Points

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Key Takeaways

US stocks end the week in the red as investors grapple with increasing uncertainties
Monday futures tumble sharply with Dow futures down more than 400 points

Stocks End Last Week with Losses, Reach a One-Month Low

Stocks on Wall Street declined on Friday, hitting a four-week low, as investors elevated their concerns about a potential global economic slowdown underlined by inflation more persistent than previously predicted. Futures on Monday point to a selloff at the opening bell in New York.

After opening fairly flat to slightly positive, all three major stock indexes in the US drifted in negative territory on Friday. The downward pressure erased the modest weekly gains, leading stocks to close the week with declines. The Dow Jones Industrial Average closed its third straight week in the red.

The S&P500 tumbled 40.76 points, or 0.91%, to finish Friday’s market action at 4,432.99. The Nasdaq Composite lost 137.96 points, or 0.91%, to end the session at 15,043.97. The blue-chip Dow Jones Industrial Average fell 166.44 points, or 0.48%, to 34,584.88.

For the week, the broader S&P500 slipped 0.6%, logging a second consecutive week of losses. The tech-heavy Nasdaq Composite dropped 0.5% over the week, while the 30-stock Dow Jones edged lower by 0.1%.

Rising Uncertainties Threaten Reopening Efforts

Several factors have contributed to the risk-averse mood among stocks. Over the past few months, inflation has stayed consistently above 5% while some sectors, such as housing, have seen prices rise roughly 25% on an annualized basis.

Furthermore, investors still grapple with the spread of the Delta variant of the coronavirus as new outbreaks globally have threatened to derail reopening efforts. Mixed economic data has also affected market sentiment.

Last week, the US reported an unexpected boost to retail sales for August. On the other hand, the week ended Sept. 11 showed a slight increase in Americans applying for first-time unemployment benefits.

Futures on Monday Point to a Sharp Selloff

Against this backdrop, investors are not looking optimistic to kick off this week’s trading. Futures contracts tied to the three major benchmarks tumbled deeply in negative territory in pre-market activity on Monday.

Futures on the Dow Jones Industrial Average declined about 450 points in the early hours today, or more than 1.3%. S&P500 futures were lower by more than 1%. Nasdaq futures also dropped about 1%.

Increased pressure on Asian stocks today has transferred across continents. Hong Kong’s Hang Seng benchmark index plunged 4% today after the China Evergrande Group announced it is on the brink of collapse due to the $300bn in debts it has accumulated over the years.

The US Federal Reserve Gathers This Week

Beyond economic data and global uncertainties, the market this week is expecting the latest updates from the US Federal Reserve. The central bank of the US gathers for its two-day regular policy meeting on Tuesday and Wednesday. Fed officials have been talking for months about tapering, or scaling down, the vast monetary support that has buoyed the US economy and stock market since the pandemic.

At their meeting this week, policymakers at the Fed could decide the time has come to reduce the volume of security purchases which has been steady at $120bn every month for the last 18 months. Some analysts point that, given the uncertain outlook for the economy, the Fed might decide to wait for its November or December meeting to begin tapering.

Elsewhere in the Markets

In other markets, European shares on Monday turned negative at the opening. Major indexes in the old continent declined between 1.2% and 2.1% with the Stoxx Europe 600 trading lower by 1.7%.

Bitcoin dipped earlier today and reached a session low of $45,100. Slightly higher, the original cryptocurrency is now changing hands at $45,500 per coin.