U.S. stocks faced a bumpy start to the week on Monday as investors grappled with fresh concerns over the economic outlook and corporate earnings. The Dow Jones Industrial Average was on track to open over 150 points lower after aircraft manufacturer Boeing saw its shares plunge in premarket trading.
Boeing stock dropped nearly 8% after U.S. regulators ordered some 737 Max 9 jets grounded due to a structural problem. The company is still reeling from the damaging impacts of the 737 Max crisis a few years ago, and this latest setback spells more trouble. Airlines operating the Max 9 jets also saw shares fall, with Alaska Air Group and United Airlines poised to open lower. Spirit AeroSystems, which produces fuselages for the Max 9, saw its stock crater nearly 20%.
The Boeing news added to existing worries that have shaken investors in early 2024. Hopes for an imminent pivot by the Federal Reserve on interest rates are fading after strong jobs data suggested the central bank still has room to keep hiking rates to combat inflation. This week brings key updates on consumer prices as well as the start of fourth-quarter earnings season, which could fuel more volatility.
JPMorgan Chase, Wells Fargo and Bank of America will provide early insights into how banks fared in the final months of 2022 when they report results this week. The major banks face pressures from higher interest rates eating into demand for mortgages and other loans. Investors will look for signs of how resilient bank profits are amid the changing rate environment.
Thursday’s consumer price index report also looms large. Economists expect inflation edged down on an annual basis in December but likely remained well above the Fed’s 2% target. More evidence of sticky inflation would likely solidify expectations for further rate hikes this year rather than cuts. The benchmark 10-year Treasury yield held above 4% after last week’s rise, reflecting fading hopes for an imminent Fed pivot.
Meanwhile, oil prices tumbled nearly 3% as Saudi Arabia unexpectedly cut pricing for crude exports to Asia and other regions. The move raises concerns about waning demand in major markets like China. Lower oil prices could ease some inflationary pressures but also signal a weakening global economy.
After snapping a nine-week winning streak last week, U.S. stock indexes face renewed uncertainty. The S&P 500 and tech-heavy Nasdaq 100 were little changed in premarket trading after falling sharply at the end of last week. Lingering inflation and recession fears have markets on edge despite the early 2024 rally.
This week’s financial results and economic data could help determine whether stocks build on January’s gains or head for another pullback. Savvy investors will watch closely for signals about consumer and business health. Even with fresh worries over growth and rates, the U.S. may still avoid a severe downturn if corporate profits hold up and inflation continues slowly receding.
