Stock futures churned to start the week as investors rotated out of mega-cap technology stocks and into energy and financial shares.
Dow Jones Industrial average futures fell about 20 points. The blue-chip average last week notched its best weekly performance since June. S&P 500 futures lost 0.3% and Nasdaq 100 futures shed 0.6%.
Energy stocks boomed in the premarket as WTI crude oil topped $81 a barrel. The U.S. oil benchmark was still up more than 2%, but pulled back from session highs.
Bank stocks like JPMorgan gained in early morning trading ahead of earnings on Wednesday.
Shares of Merck gained in the premarket after the drug maker asked the Food and Drug Administration to authorize emergency use of its antiviral Covid pill.
Meanwhile, Big Tech names Facebook, Apple, Amazon, Microsoft and Alphabet were weak in the premarket.
Futures also took a hit Monday morning as Goldman cut its economic growth forecast. Goldman lowered its 2022 growth estimate to 4% from 4.4% and took its 2021 estimate down a tick to 5.6% from 5.7%. The firm cited the expiration of fiscal support from Congress and a slower-than-expected recovery in consumer spending, specifically services.
The U.S. bond market is closed Monday for Columbus Day.
This week, major banks will kick off their third-quarter earnings reports. JPMorgan kicks it off on Wednesday, with Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo and Citigroup following later in the week. Delta Airlines and Walgreens Boots Alliance reports are also on deck.
Analysts estimate an earnings growth rate of 27.6% for the S&P 500 in the third quarter, which would be the third-highest growth rate since 2010.
Last week, the Dow gained 1.2%, for its best week since June 25. The S&P 500 also traded in the green as stocks reversed losses earlier in the week with Congress coming together for a short-term deal on the debt ceiling.
Stocks managed to post gains for the week despite a poor jobs report on Friday. The Labor Department reported Friday that the economy added just 194,000 jobs in September compared to the Dow Jones estimate of 500,000.
“The three-month moving average on nonfarm payrolls is a solid 550,000,” Joe LaVorgna, chief Americas economist at Natixis CIB, said in a note. “The recovery in the jobs market has progressed enough that the Fed will initiate tapering next month with targeted completion around June next year.”
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, added that it would have taken an “extremely bad” jobs report to derail the Federal Reserve’s plan to begin removing stimulus and that although the report was “disappointing, without a doubt, we don’t believe it is bad enough to stop them.”
Plus, the unemployment rate itself fell to 4.8%, much lower than economists’ forecast.
After a 4.8% loss in September, the S&P 500 is now up about 2% for the month of October and sits about 3% from its record.