Dow futures fall 300 points to start the week as higher rates rattle Wall Street: Live updates

New research from UBS suggests that apparel sales have weakened in February and the firm expects this trend, when realized, will stoke fears about consumer spending and cause some stocks to sell off.

In a research note Monday, retail industry analyst Jay Sole said he expects “market sentiment will turn more bearish over the coming weeks.”

According to UBS, investors aren’t fully appreciating the stress high inflation and interest rates have inflicted on most household balance sheets. And now consumers will see further stress from lower tax refunds and feel the pinch from the drop in fiscal stimulus like SNAP benefits and child tax credits.

—Christina Cheddar Berk

U.S. stock futures added to their losses less than an hour ahead of Tuesday’s open. Dow Jones Industrial Average futures last dropped 322 points, or 0.95%. S&P 500 and Nasdaq 100 futures fell 0.8% and 1.1%, respectively.

— Hakyung Kim

Here are some of the companies making the biggest moves in the premarket:

• Vir Biotechnology — The immunology company jumped 13.4% after Goldman Sachs upgraded the stock to buy from neutral. The Wall Street firm also said Vir could double, citing the company’s release of flu vaccine data in the year ahead.
• AutoNation — The car dealer fell 1.8% after being downgraded by JPMorgan to underweight from neutral. The firm said AutoNation is starting to look overvalued amid the pullback in consumer demand for vehicles.
• HSBC Holdings — The bank gained about 4% after reporting fourth-quarter earnings that topped analysts’ estimates. HSBC said it had strong reported revenue growth and lower reported operating expenses.

To see more stocks moving in premarket trading, read the full story here.

— Michelle Fox

Upcoming economic data announcements will give investors greater insight to the state of the U.S. economy, according to Oppenheimer, following a volatile week for stocks and bonds. 

“Investors and traders stateside returning to a President’s Day abridged week have plenty to consider as Q4 earnings season winds down with results,” Chief Investment Strategist John Stoltzfus wrote in a Tuesday note.

He continued, “From a macro perspective a brace of economic data this week should provide fodder for insights and commentary on the health of the US economy particularly as it relates to inflation, monetary policy and earnings in the months ahead with both earnings results and economic data to call the direction of stocks, bonds and other assets.”

The Fed is scheduled to release the minutes of its meeting of Jan. 31 and Feb. 1 on Wednesday. The quarterly GDP growth rate and February’s consumer sentiment data will be released on Thursday and Friday, respectively.

— Hakyung Kim

Walmart shares dipped 2.5% even after the retail giant posted better-than-expected results for the previous quarter.

The company earned $1.71 per share on revenue of $164.05 billion in its fiscal fourth quarter. Analysts expected earnings per share of $1.51 on revenue of $159.72 billion.

However, CFO John David Rainey said, “the consumer is still very pressured.”

“And if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year.”

— Fred Imbert, Melissa Repko

Home Depot shares fell roughly 3% after the home improvement retailer posted a mixed quarterly report.

The company’s earnings per share of $3.30 topped a Refinitiv forecast of $3.28 per share. Revenue, however, came in at $35.83 billion. That’s slightly below a consensus estimate of $35.97 billion. Home Depot also said it sees sales to remain flat for fiscal 2023.

Retail giants Walmart and Home Depot are slated to report earnings Tuesday, and they could give investors some insight on how well the consumer is doing. Both companies are scheduled to post their latest quarterly results before the bell.

Home Depot’s earnings have beaten expectations for 10 straight quarters, FactSet data shows. Walmart, meanwhile, has outpaced analyst forecasts in eight of the last 10 quarters.

Walmart and Home Depot have lagged the broader market to start 2023. Walmart’s stock is up just 3.3% year to date, while Home Depot has advanced just 0.7%. The S&P 500 has climbed more than 6% in that time.

The Federal Reserve’s release of it’s Jan. 31-Feb. 1 meeting minutes could be a market-moving event this week, as traders continue to search for clues on the central bank’s next policy moves.

The minutes are slated for release Wednesday at 2 p.m. At that meeting, the central bank hiked rates by 25 basis points and noted it expects “ongoing” increases.

Last week, St. Louis Fed President James Bullard said a 50 basis point rate hike can’t be ruled out at the next meeting. He also said he advocated for such a rate increase at the most-recent meeting.

— Fred Imbert

Many of the traders who were short tech are unwinding those positions, Goldman Sachs said.

Strategists at the bank noted that, over the past 12 trading day, buying on U.S. tech names has been mainly driven by short covering “and to a much lesser extent long buys.”

“In cumulative notional terms, the short covering in US Tech stocks from Jan 31st to Feb 15th is the second largest in magnitude over any 12-day period in the past decade and ranks in the 99.5th percentile,” Goldman said.

— Fred Imbert, Michael Bloom

U.S. stock futures got off to a rough start Monday night. Dow and S&P 500 futures lost 0.3% and 0.2%, respectively. Nasdaq-100 futures also dipped 0.2%.

— Fred Imbert