U.S. stock futures slipped early Monday, implying a lower open to start August trading after all three major indexes notched their best month since 2020.
Futures tied to the S&P 500 stumbled 0.3%, while futures on the Dow Jones Industrial Average edged down roughly 60 points, or 0.2%. Contracts on the tech-heavy Nasdaq Composite fell 0.3%.
The moves come after stocks capped a month of strong gains on Friday. In July, the benchmark S&P 500 index rallied 9.1%, fighting back from its worst start to a year since 1962. The Nasdaq Composite soared 12.3% to log one of its best months on record, and the Dow Jones Industrial Average rose 6.7% for the month.
DataTrek’s Nicholas Colas points out that in recent weeks, equities have reflected typical “risk-on” behavior, with small-cap stocks outperforming large-caps, and the Nasdaq Composite beating the S&P 500. The sharp re as expectations grew that signs of a slowing economy may prompt the Federal Reserve to scale back its interest rate hiking cycle in the fall.
“Summer is a great time to go camping, but we aren’t out of the woods yet,” analysts at Bank of America said in a note Sunday morning, warning of more pain ahead for equities.
During the last five recessions, the S&P 500 bottomed only after earnings estimates for the index were revised down – with the exception of 1990 when forward EPS remained flat – but cuts to estimates are only starting, BofA pointed out.
“Our bull market signposts also indicate it’s premature to call a bottom,” analysts said, adding that historical market bottoms occur when 80% of indicators of indicators of a bottom are triggered, compared to only 30% currently and also that bear markets usually end only after the Fed begins to cut rates – a move likely at least six months away.
Investors are in for another busy week of economic data and corporate earnings. The Labor Department’s July jobs report is the major event of the week, with data out Friday expected to show nonfarm payrolls grew by 250,000 in July.
Meanwhile, another 150 companies in the S&P 500 are on deck to report second-quarter results.
While some earnings have come in better than expected, among roughly 56% of companies that have reported results so far for Q2, earnings have come in only 3.1% above estimates, below the five-year average of 8.8%, according to data from FactSet Research.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc