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Investing.com — U.S. stock futures traded in a lackluster fashion Monday, with last week’s positive sentiment dissipated by Moody’s decision to downgrade its U.S. credit rating outlook, raising doubts about the country’s fiscal sustainability.
By 06:30 ET (11:30 GMT), the contract was largely flat, traded 8 points, or 0.2%, lower and dropped 42 points, or 0.3%.
The benchmark U.S. equity indices closed substantially higher Friday, boosted by heavyweight tech and growth stocks as Treasury yields calmed, resulting in tech-heavy recording its biggest one-day percentage rise since May 26.
The Nasdaq Composite climbed 2.4% last week, the broad-based rose 1.3% and the 30-stock rose 0.7%.
Moody’s cuts U.S. credit rating outlook
Moody’s (NYSE:) credit rating agency late Friday changed its outlook on the government of United States of America’s credit ratings to “negative” from “stable”, while affirming its “Aaa” long-term rating.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency said. “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
Federal spending and political polarization have been a rising concern for investors, contributing to a selloff that took U.S. government bond prices to their lowest levels in 16 years.
U.S. CPI release looms large
Also contributing to the rangebound trading is the proximity of Tuesday’s U.S. data for October, which will provide an update on the Fed’s progress in its battle to keep lowering inflation from last year’s multi-decade highs.
Inflation is expected to have risen 0.1% on a monthly basis, up 3.3% on an annual basis. September’s CPI rose 0.4% on a surprise surge in rental costs, an annual gain of 3.7%, but also showed a moderation in underlying inflation pressures.
While this suggests a cooling of inflationary pressure, Fed Chair last week hinted that the battle against inflation may not be over yet, and a further interest rate hike was possible – a view that was largely backed up by a series of his colleagues throughout the week.
Big-box retailers to reveal earnings
The earnings season is approaching the end, but several big-box retailers are set to unveil their latest quarterly results this week.
Home Depot (NYSE:) is due to report ahead of the open on Tuesday, followed by Target (NYSE:) on Wednesday, while earnings from Walmart (NYSE:) and Macy’s (NYSE:) are scheduled to be released on Thursday.
Any guidance from retail executives ahead of the all-important holiday shopping season will likely be in focus.
Oil heads for another losing week
Oil prices edged higher Monday, attempting to rebound after last week’s sharp losses given persistent concerns over slowing global demand, particularly from China, the world’s biggest crude oil importer.
By 06:30 ET, the futures traded 0.2% higher at $77.34 a barrel, while the contract climbed 0.2% to $81.62 a barrel.
Both benchmarks posted gains on Friday, but still lost about 4% for the week, notching their third weekly losses for the first time since May.
Additionally, rose 0.2% to $1,941.15/oz, while traded 0.1% higher at 1.0688.
(Oliver Gray contributed to this item.)
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