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Stock futures edged higher on Monday, as investors sought to shake off April’s wide selloff ahead of the Federal Reserve’s expected forceful action to contain inflation.
Dow Jones Industrial Average futures increased 150 points, or 0.5 percent, to 33,030, while S&P 500 futures jumped 0.5 percent and Nasdaq futures rose 0.7 percent.
Wall Street is starting a new month after an April that can only be described as harsh.
The Dow fell 2.8 percent, the S&P 500 fell 3.6 percent, and the tech-heavy Nasdaq fell 4.2 percent on Friday.
(ticker: AMZN) has dropped more than 14% to its lowest level since 2006, following a profit miss and disappointing sales guidance. In April, the indices lost 4.9 percent, 8.8 percent, and 13.3 percent, respectively.
While those figures are bad, they aren’t nearly as bad as the Dow’s 9.2% plunge, the S&P 500’s more than 13% drop, and the tech-heavy Nasdaq’s more than 21% decrease in the first four months of the year, the worst start to a year on record dating back to 1971.
The reasons for the stock market’s decline are several. The most important question is whether the Federal Reserve’s efforts to reduce inflation would result in a recession. The Federal Open Market Committee of the United States is meeting this week and is expected to announce a 50-basis-point rate hike on Wednesday, the largest rise since 2000. It is also expected to approve a balance sheet decrease.
“The Federal Reserve is likely to announce a 50 basis-point rate hike in May, along with all the terminology associated with tighter monetary policy,” said David Bahnsen, chief investment officer of the Bahnsen Group, a wealth management business based in Newport Beach, Calif.
“While the Fed’s balance sheet remark will most likely be ambiguous, I’d love for the Fed to indicate that it plans to allow $3 trillion worth of bond holdings to roll off its balance sheet, which has risen significantly over the past two years and decade.”
The Russia-Ukraine conflict has exacerbated inflation, pushing Western nations to exclude Russian commodities from the global market, putting greater pressure on consumers and business profit margins. Lockdowns in China have also prevented international access to supplies coming out of the country.
(AAPL) announced last week that supply limitations would cost the company $4 billion to $8 billion in the third quarter of its fiscal year. Covid-related shutdowns, according to the IT giant, are having an impact on client demand in China.
China’s manufacturing activity decreased more than predicted in April, according to statistics released Monday, as prolonged strict lockdowns in Shanghai and other areas interrupted production. Shanghai’s stock exchanges were closed.
Stocks fell in Europe, but trading was limited due to a bank holiday in the United Kingdom.
Here are a few stocks to watch on Monday:
Amazon was steady in premarket trading Monday at $2,486 after the stock sank dramatically Friday following a weaker-than-expected second-quarter sales forecast.
Early Monday, Apple climbed 0.5 percent to $158.73. On Friday, shares of the computer giant fell 3.7 percent after the company offered a gloomy outlook for the June quarter.
Berkshire Hathaway’s Class B shares increased 0.6 percent after the conglomerate run by Warren Buffett reported first-quarter operating earnings after taxes of $7 billion, up less than 1% year over year, as the business reduced its share repurchases as the stock price soared.