Stock futures are flat after major averages show negative first week in four

U.S. stock index futures were little changed on Sunday’s trading day, after major averages posted their first negative week of four.

Futures contracts linked to the Dow Jones Industrial Average lost 48 points. S&P 500 futures were down 0.12%, while Nasdaq 100 futures were slightly lower.

The Dow Jones and S&P fell 0.52% and 0.97% last week, respectively. The Nasdaq Composite, meanwhile, was the relative underperformance, falling 1.87% to post its worst week since May.

Inflation fears weighed on stocks, with a University of Michigan U.S. Consumer Confidence Index released on Friday showing consumers believe prices will rise 4.8% over the next year. This is the biggest increase since August 2008. Earlier in the week, the consumer price index for June showed that inflation jumped 5.4% year-on-year, scaring investors.

On the flip side, retail sales figures released on Friday are better than expected, rising 0.6% in June from expectations of a 0.4% decline.

“Inflation is still driven by a relatively narrow range of goods and services affected by the pandemic,” UBS said in a recent memo. “We do not yet see inflation as an obstacle to further gains in the stock markets,” the company added. UBS recently raised its June 2022 price target for the S&P 500 to 4,650.

A busy earnings week is upon us, with nine Dow components due to be reported on and 76 S&P companies providing quarterly updates. United Airlines and American Airlines will report, as will social media companies Snap and Twitter. CSX, Johnson & Johnson, Coca-Cola, Honeywell, IBM, Intel and Netflix are also on the program.

The biggest banks kicked off the earnings season last week, and BMO analysts noted that before the start of the earnings season, 66 companies in the S&P 500 had posted positive earnings guidance for the quarter, the most significant since at least 2006.

“The second quarter earnings season has arrived and another stellar reporting period is expected for US stocks with the S&P 500 year-on-year growth rate currently at 65.5%, which would mark the strongest clip since the fourth quarter of 2009, “the company said in a recent note to customers.

On the economic data front, the National Association of Home Builders will release its latest survey results on Monday, giving consumers a snapshot of sentiment in the housing market. Economists polled by Dow Jones expect the reading to be unchanged from the previous month at 81. Anything above 50 is considered positive sentiment.

For the month of July, the Nasdaq Composite is down 0.5%. The S&P 500 and the Dow Jones are however in the green, up 0.7% and 0.5%, respectively. The Russell 2000 is down more than 6% due to weakness in small caps.

“The makeup of recent data suggests that inflation will be largely transient as stated by the Fed,” said Ryan Detrick, chief financial markets strategist at LPL. “The big question is how long ‘transient’ will be. We’re in the middle of the season when we expected to see some hot impressions, so this week hasn’t necessarily been a surprise.”