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Dow futures dropped more than 300 points as the week started, reopening stocks lead the slide

Dow futures dropped more than 300 points as the week started

July 20, 2021: -On Monday, U.S. stock index futures decreased on concern a rebound in Covid-19 cases would decrease the global economic growth.

Stocks that would directly benefit from an ongoing swift reopening of the economy led the losses in premarket trading, with Royal Caribbean and United Airlines shares decreasing over 2%. The 10-year Treasury yield goes to 1.26% back, near 5-month lows between the concerns about a possible slowing the economy.

Futures contracts tied to the Dow Jones Industrial Average dropped 303 points or 0.9%. S&P 500 futures fell 0.6%. Nasdaq-100 futures shed 0.3%.

“The market appears ready to take on a defensive character as we experience a meaningful deceleration in earnings and economic growth,” wrote Mike Wilson, the chief U.S. equity strategist of Morgan Stanley, in a note Monday.

A caught-up week of earnings is on deck, including nine Dow components set to report, and 76 S&P companies will provide quarterly updates.

The well-known banks kicked off earnings season in the previous week, and analysts at BMO noted that ahead of the beginning of earnings season, 66 companies in the S&P 500 issued positive earnings guidance for the quarter, as it is huge since 2006.

The Dow and S&P fell 0.52% and 0.97% last week, respectively. Meanwhile, the Nasdaq Composite was the relative underperformer, dropping 1.87%, to post its worst week since May. It was the significant averages first negative week in four.

Inflation fears weighed on stocks last week. On Friday, a U.S. consumer sentiment index from the University of Michigan released shows that consumers believe prices will increase 4.8% over the coming year. This is the steepest climb from August 2008. This week, the June Consumer Price Index shows that inflation went up to 5.4% year-over-year, spooking investors.

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

For July, the Nasdaq Composite is down 0.5%. However, the S&P 500 and Dow are green, rising 0.7% and 0.5%, respectively.

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