Dow Futures Declines Before “Brutal” Profit Week, Wildcard In North Korea

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  • Dow Jones futures traded in a range of 215 points Sunday evening.
  • The markets are preparing for a week of ugly results, Alphabet, Apple and Tesla signaling how negative Covid-19 has had on their business.
  • So far, the drop in mixed profits from the S&P 500 is much worse than expected.

Futures on the Dow Jones and the broader US stock market were traded on Sunday night, as investors stepped aside before what should be a week of ugly earnings for Wall Street.

Dow, S&P 500, Nasdaq Futures under pressure

Futures on the three major US indices were under pressure on Sunday evening, reflecting a worried mood in world markets. Dow Jones contracts lost up to 123 points before making up for the losses later that evening. The contract was down 35 points, or 0.2%, to 23,623.00.

The equity futures traded in a mixed fashion Sunday evening before a potentially volatile week for the markets. | Graphic: Yahoo finance

The S&P 500 futures contract fell 0.2% to 2,823.00. Mini futures on the Nasdaq were relatively stable at 8,772.25.

Focus on corporate profits

The Dow Jones’ three-day winning streak could be at risk on Monday as investors look to a busy week for corporate profits.

Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Intel (NASDAQ: INTC) and Tesla (NASDAQ: TSLA) are all expected to publish their quarterly reports with Dow Blue-chips Boeing (NYSE: BA ) and Exxon Mobil (NYSE: XOM).

Several companies have been forced to cut their quarterly forecasts due to the coronavirus pandemic. Institutions like the International Monetary Fund have warned of a depression-like collapse for the global economy, as governments have invoked large-scale house arrest orders to contain the spread of Covid-19.

Find out why Paul Markham of Newton Investment Management thinks Q1 2020 results are a write-off:

Investors have already understood how the coronavirus has affected corporate profits. Major Wall Street banks, including Goldman Sachs (NYSE: GS), JPMorgan (NYSE: JPM) and Citigroup (NYSE: C), reported profit declines ranging from 46% to 69% in the first quarter.

According to FactSet, as of April 17, the S&P 500 companies reported a decrease in mixed profits of 14.5%, much worse than the expected 6.8% drop. If the figures remain valid, the first quarter of 2020 will mark the worst quarter since FactSet began publishing its reports in 2009.

Wildcard North Korea

Profits are not the only concern of investors this week. Conflicting health reports from North Korean leader Kim Jong-un could rock the markets.

Some investors will no doubt cheer Kim’s disappearance, but the fallout could trigger yet another dead end on the Korean peninsula.

The purchase of panic has already gripped the people of North Korea because even they do not know the fate of their supreme leader. According to the New York Post, store shelves in Pyongyang “were cleaned of everything from alcohol to laundry detergent,” amid conflicting reports of Kim’s health.

Disclaimer: The author has no investment position in the assets mentioned above.

This article was edited by Josiah Wilmoth.

Last modified: April 27, 2020 2:04 UTC

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