Stock futures were little changed as investors brace for the start of Q2 earnings

Traders on the floor of the NYSE, June 27, 2022.

Source: NYSE

U.S. stock futures were little changed after hours on Monday, as Wall Street anticipates what many expect to be the start of a volatile second-quarter earnings season this week.

Dow Jones Industrial Average futures fell 6 points, or 0.02%. S&P 500 and Nasdaq 100 futures fell 0.02% and 0.04% respectively.

Gap shares fell more than 3% in extended trading after the clothing retailer said CEO and chairman Sonia Syngal was stepping down.

The Dow Jones in Monday’s session lost 164.31 points, or 0.5%. The S&P 500 fell 1.2%, while the Nasdaq Composite lost nearly 2.3%.

The moves come as investors prepare for companies to start reporting their latest results. Market participants will be watching downside risks to earnings forecasts as companies grapple with rising interest rates and heightened inflationary pressures, and Wall Street debates the likelihood of a recession.

“In terms of S&P earnings, for example, we think we’re already heading into an earnings recession,” Marathon Asset Management’s Bruce Richards said Monday on CNBC’s “Closing Bell.”

“Businesses are squeezed from all sides, they’re squeezed by cost of goods and wages and anything that goes into contributing our manufacturing goals or services. And on the other hand, we think revenue is starting to flatten before turning at a time of rising interest charges… That’s a lot of downgrades, a lot of potential failures coming from the system due to higher loads.”

On the earnings front, traders will be looking at several major company reports this week. On Tuesday, PepsiCo is expected to report earnings before the market opens. Other companies due to report include Delta Air Lines on Wednesday and JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup on Thursday and Friday.

Market participants will carefully assess the June Consumer Price Index report on Wednesday. The headline inflation figure, including food and energy, is expected to rise to 8.8% from May’s level of 8.6%, according to Dow Jones estimates.

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