Here are five things you need to know for Monday, October 11:
1. – Futures contracts
U.S. equity futures fell slightly on Monday, as oil prices extended their recent rally beyond the highest levels in seven years, as investors braced for a key week on Wall Street that could define the direction of the market in the last months of the year.
With a global energy crisis boosting inflation expectations, semiconductor shortages expected to last until 2022, and corporate profits under pressure from rising input costs and a tight labor market, Investors are recalibrating both their global growth and market performance assumptions amid the lingering challenges caused by the global pandemic.
Official data on inflation and retail sales this week, following Friday’s disappointing jobs report, will provide two key readings on the impact of energy costs and labor shortages , with the minutes of the Federal Reserve’s policy meeting in September guiding investors on how the central bank can respond to all of these factors in the coming weeks.
On top of that, the third quarter earnings season will start in earnest, with 19 companies reporting this week, including JPMorgan (JPM) – Get the JPMorgan Chase & Co. (JPM) report, Citigroup (VS) – Get the report from Citigroup Inc., UnitedHealth (A H) – Get the UnitedHealth Group Incorporated report and Honeywell (SHE) – Get the Honeywell International Inc. (HON) report.
On Wall Street, futures contracts linked to the Dow Jones Industrial Average show a modest 70 point drop at the opening, while the broad S&P 500 is valued for a 13 point downward movement. Futures on the Nasdaq Composite, meanwhile, are expected to fall 57 points, with 10-year benchmark bond yields holding 1.61% in overnight trading ahead of the Columbus Day market close. .
2. – Oil / Energy
Global oil prices extended their rally for a fifth straight week on Monday, bringing crude prices to their highest levels in seven years, as the global energy crisis continues to spread through the world’s major economies.
Flooding in China has pushed coal prices, already high relative to supply shortages and emission standards, to record highs, causing energy to be converted to crude in order to meet post-demand demand. pandemic. Similar trade is taking place in Europe, where natural gas prices remain near record highs, while OPEC continues to add marginal amounts of crude to global markets as part of the cartel’s long-standing pact to limit production.
WTI futures for November delivery of $ 1.92 more to start the session at $ 81.27 a barrel while Brent contracts for December, the global benchmark, rose $ 1.62 to $ 84.01 per barrel.
Natural gas futures for October 27 delivery, which traded at a 2008 high of $ 6.466 per million British thermal units (mmBtu) last week, fell to $ 5.775 at the start of the trade. At New York.
3. Goldman / GDP
Goldman Sachs cut its forecast for economic growth in the United States over the weekend, citing a “more lasting viral drag on virus-sensitive consumer services” and the impact of a prolonged global semiconductor shortage.
Goldman cut its growth forecast for 2021 by 10 basis points, to 5.6%, while lowering its 2022 estimate by 40 basis points to 4%, adding that consumer spending would likely be held back by the uncertainty of the pandemic and a softer-than-expected budget response from the Biden administration.
“After updating our estimates of the main growth impulses that drive our consumption forecast – reopening, fiscal stimulus, accumulated savings and wealth effects – and incorporating a more lasting virus on spending on virus-sensitive consumer services,” we expect a later recovery in consumer spending, ”said chief economist Jan Hatzius.
4. – Earnings week
The third quarter earnings season kicks off in full swing this week with around 20 S&P 500 companies reporting September quarter earnings and investors have been firmly focused on earnings projections for the final months of the year.
Collective profits of the S&P 500 are expected to rise 29.6% from a year ago to about $ 413.8 billion, according to Refinitiv’s forecast. The energy sector is expected to lead gains in the third quarter, with profits up nearly 1,500% from a year ago to around $ 20.5 billion.
JPMorgan, Citigroup, Goldman Sachs GS and Morgan Stanley to Present Financial Industry Updates This Week, Featuring Dow Honeywell Components (SHE) – Get the report from Honeywell International Inc. (HON), Walgreens Boots (WBA) – Get the Walgreens Boots Alliance Inc report and UnitedHealth Group (A H) – Get the UnitedHealth Group Incorporated report also providing September quarter updates.
Rising input costs, a tight labor market and weakening consumer demand, however, are expected to affect earnings expectations across all sectors, leading to a series of weaker-than-expected prospects for leading companies over the years. coming weeks, with the overall profit growth rate slowing to around 22.2% in the fourth quarter
5. – Southwest
Southwest Airlines (LCV) – Get the report from Southwest Airlines Co. shares fell on Monday amid reports that the carrier will extend cancellations, which have stranded nearly a third of its fleet on Sunday, until the start of the week.
Southwest said the cancellations, which made up about 30% of its Sunday flights, were linked to bad weather in Florida and “air traffic control issues,” the Dallas-based carrier said in a statement. Staff shortages linked to vaccination warrants have also reportedly affected Southwest’s weekend schedule, which included cancellations of around 28% of its Saturday flights.
“ATC issues and disruptive weather conditions resulted in a high volume of cancellations throughout the weekend as we work to resume operations,” said Southwest. “We appreciate your patience as we accommodate affected customers, and customer service wait times are longer than usual.”
Southwest Airlines shares were down 1.8% in pre-market trading Monday to indicate an opening bell price of $ 52.95 each. .