Stock futures fall following the S&P 500’s best week since June

Stock futures traded lower Monday after the S&P 500 posted its biggest weekly gain in almost five months on the back of easing inflation data.

Dow Jones Industrial Average futures fell 73 points, or 0.2%. S&P 500 futures declined 0.3%, and Nasdaq 100 futures slid by 0.5%.

The S&P 500 rallied 5.9% last week for its best week since June. Investors cheered a lighter-than-expected inflation reading, betting that the Federal Reserve would soon slow its aggressive tightening campaign.

“A notable shift has occurred in the market, with investors increasingly risk-on across asset classes,” said Mark Hackett, Nationwide’s chief of investment research. “Technical indicators have improved dramatically, with investor sentiment, momentum, breadth, and risk factors all showing notable improvement.”

The tech-heavy Nasdaq Composite gained 8.1% last week for its best week since March, while the blue-chip Dow advanced 4.2%.

The Cboe Volatility Index, known as Wall Street’s fear gauge or the VIX, fell 1 point to 22.5, hitting the lowest level since August. The VIX, which tracks the 30-day implied volatility of the S&P 500, had traded above the 30 point threshold for most of October. 

Still, the Federal Reserve has given little signal that it could deviate from its tightening path anytime soon. Fed Governor Christopher Waller said Sunday that, “We’re at a point we can start thinking maybe of going to a slower pace.” But, “we’re not softening. … Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.”

Investors also digested news on the politics front over the weekend. Democrats will keep control of the Senate in the 2022 midterm elections, NBC News projected. The party will hold at least 50 seats after Sens. Mark Kelly of Arizona and Catherine Cortez Masto of Nevada held off challenges.

Meanwhile, the third-quarter earnings season is set to continue, with a heavy emphasis on retail. Big retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are all slated to post numbers this week.