Dow Futures Fall 60 Pts; Retail Earnings in Focus

© Reuters

By Peter Nurse    

Investing.com -- U.S. stocks are seen opening marginally lower Monday at the start of a big week for retail earnings as well as the release of keenly studied monthly retail sales data.

At 7 AM ET (1100 GMT), the Dow Futures contract was down 60 points, or 0.2%, S&P 500 Futures traded 14 points, or 0.3%, lower and Nasdaq 100 Futures dropped 65 points, or 0.5%.

The main equity indices closed higher on Wall Street on Friday, with the blue-chip Dow Jones Industrial Average rising over 460 points, or 1.5%, the broad-based S&P 500 climbing 2.4% and the tech-heavy Nasdaq Composite jumping 3.8%, its strongest one-day gain since November 2020. 

However, despite these strong gains, the three averages still posted losing weeks, with the S&P 500 close to bear market territory, as investors worried that aggressive monetary policy tightening to combat inflation will slow growth, potentially pushing the U.S. economy into recession.

Goldman Sachs cut its forecasts for U.S. growth for this year and next over the weekend, while the influential investment bank's former CEO Lloyd Blankfein noted that the risks of a recession in the U.S. have risen significantly.

Economic data this week will be closely scrutinized as investors try to gauge whether the Fed can engineer a soft landing for the economy, belief in which could see selling on Wall Street end.

The NY Empire State manufacturing index for May is due later Monday, but a lot of focus will be on Tuesday’s retail sales for April. Economists are forecasting a 0.8% increase after a 0.7% rise in March.

Also of interest will be a spate of retail earnings reports during the week, starting with the largest U.S. retailer Walmart (NYSE:WMT) and home improvement giant Home Depot (NYSE:HD) on Tuesday, for signs of how these companies are managing inflation, which stands near 40-year highs.

Elsewhere, JetBlue Airways (NASDAQ:JBLU) launched a hostile all-cash takeover bid for Spirit Airlines (NYSE:SAVE), appealing to the discount airline’s shareholders with Spirit's board continuing to prefer a merger proposal from Frontier Group (NASDAQ:ULCC). 

McDonald’s (NYSE:MCD) will also be in focus after the fast-food giant announced Monday it was selling its business in Russia after 30 years of operating its restaurants in the country, following the invasion of Ukraine. 

Oil prices weakened Monday on signs of weakening Chinese demand but remained at elevated levels as the European Union prepared an import ban on Russian crude.

China, the world’s largest importer of oil, processed 11% less crude in April than a year earlier, according to data released earlier Monday, as refiners slashed operations in the face of dwindling demand due to widespread COVID-19 lockdowns.

By 7 AM ET, U.S. crude futures traded 1.2% lower at $107.35 a barrel, while the Brent contract fell 1.3% to $110.13.

However, crude prices remain above the $100 a barrel level, and the WTI contract recently posted its highest level since March 28, with the European Union still expected to agree to a phased embargo on Russian oil this month despite concerns about supply in eastern Europe.

Additionally, gold futures fell 0.2% to $1,804.36/oz, while EUR/USD traded 0.3% higher at 1.0437.