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Stock futures were falling early Monday after two of the three major stock indexes finished last week at a record high. The question for investors is what effect a big week for company earnings will have.
Futures for the Dow Jones Industrial Average fell 31 points, or 0.1%, before trading started on Monday. Contracts tied to the S&P 500 were also falling 0.1%. Futures for the Nasdaq, the only index of the three not to end last week on a high, were down 0.3%.
About one in five S&P companies will report earnings this week, including Tesla, General Motors, and Coca-Cola. Although October is often difficult for stocks, the index notched its 47th record close this year on Friday, bringing total gains to 23%. Earnings last week were broadly positive as consumer spending held up, and stocks will also benefit from Federal Reserve interest-rate reductions in the coming months.
Elsewhere, China’s central bank cut two key interest rates, which should encourage growth in the world’s second-biggest economy. On the other hand, the continued tension in the Middle East is making some haven assets more attractive–spot gold prices touched a new record early Monday.
“October’s stock market is bucking the historical trend with remarkably little volatility so far this month,” said David Laut, chief investment officer at Abound Financial. “While there are plenty of reasons why stocks should be choppy, from election uncertainty to rising geopolitical tensions, the stock market is overlooking all of these worries as it’s become clear that a soft landing is upon us.”
Bond yields were slightly higher to start the week. The 10-year Treasury yield was at 4.107%. The two-year yield was 3.983%.
