S&P 500 futures are flat after benchmark wraps up worst month since March 2020

S&P 500 futures are flat after benchmark wraps up

February 2, 2022: -Stocks futures were little changed on Tuesday morning, after a wild January on Wall Street that experienced investors struggle with a Federal Reserve policy shift.

Futures tied to the Dow Jones Industrial Average decrease about 4 points or 0.01%. S&P 500 futures traded 0.04% higher, while Nasdaq 100 futures which adds 0.3%.

AT&T said it would be shedding its stake in WarnerMedia following a planned merger with Discovery incorporate news of note. Shares decrease 2.7% in premarket trading following the news. AT&T’s board approved a post-close annual dividend of $1.11, compared to the current rate of $2.08, because of the spinoff.

Shares of UPS jumped 7%, d its quarterly dividend was 49%. Its rival FedEx added 3%.

Over the last several days, investors have stepped in to buy a dip in which the S&P 500 briefly decreases into correction territory, defined as a drop of 10% from the most recent high. The large-cap index has increased 2.4% over the past five trading days.

While stocks pulled off a tech-driven rally on Monday, major averages still suffered a brutal month marked by wild price swings. The S&P 500 and the Nasdaq Composite posted their worst months since March 2020 at a depth of the pandemic, down 5.3% and 8.9%, respectively. It was also the S&P 500′s most significant January decline since 2009. The blue-chip Dow slid 3.3% for the month.

January’s sell-off came as the Fed signaled its readiness to tighten monetary policy, which includes increasing interest rates multiple times this year, taming inflation that has shot up to the highest level in nearly four decades, and reduces its balance sheet. Investors flocked out of growth-oriented technology shares, susceptible to rising rates.

Volatility exploded as investors deciphered the Fed’s messaging on its policy pivot. At one point in the previous week, the S&P 500 dipped into correction territory on an intraday basis. The last comeback pushed the large-cap benchmark 6.3% below its peak. Meanwhile, the Nasdaq, weighted to tech names, is still in a correction, last down 12% from its all-time high.

However, Ed Yardeni, president of Yardeni Research, said last month’s market activity hadn’t turned him bearish.

“We believe that once the FOMC starts to raise the federal funds rate and details the pace of running off the Fed’s balance sheet, the financial markets will learn to live with tightening monetary policy as it doesn’t risk causing a recession,” he said on Tuesday.

Still, many Wall Street strategists remind investors that corrections are normal in bull markets. Since 1950, there have been 33 S&P 500 corrections of 10% or more 1950, and the median episode has lasted nearly five months, according to Goldman Sachs.

“The recent decline is a normal market correction that does not signal a recession or the end of this bull market,” said Chris Haverland, global equity strategist at Wells Fargo. “We continue to believe that economic growth and corporate earnings will be solid this year and that the Fed will not be aggressive in dialing back monetary policy.”

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