Israel bombarded Gaza with air strikes overnight, with Prime Minister Benjamin Netanyahu convening a meeting of his top generals and his war cabinet to assess the escalating conflict.
These rising tensions, along with surging bond yields on higher rates expectations pulled the Wall Street lower last week, with the S&P 500 falling 1.26% and the Cboe Volatility index closing at its highest since March 24.
The benchmark stock index is down 8% from late July, when it hit its high for the year, though still up 10% year-to-date.
Yield on the 10-year benchmark Treasury note continued to hover around 5%, the mark it briefly breached last week after Federal Reserve Chair Jerome Powell said that US economy’s resilience and tight labor market could warrant further rate hikes.
Investors will now shift focus to a busy week of earnings from Microsoft, Amazon, Alphabet and Meta Platforms – four of the seven US megacap stocks whose gains have powered the S&P 500 higher in 2023 while the rest of the index lagged.
Chipmaker Intel INTC.O, oil major Exxon Mobil Corp, General Motors are some of the other companies reporting quarterly results this week.
Of the 86 companies in the S&P 500 that have reported earnings so far in the third quarter, 78% have been above analyst estimates, according to the LSEG data. Overall, the third-quarter earnings likely to grow 1% year-on-year.
US GDP print will be closely monitored by investors in the week amid expectations that the economy grew at a robust 4.2% in the third quarter, which might warrant tighter monetary policy.
Money markets still see a 98% and 75% chance the Fed will keep rates unchanged in November and December, respectively, according to the CME’s FedWatch Tool.
Powell will be giving brief introductory remarks at an event on Wednesday but it is unlikely he would speak on monetary policy since the blackout period for the Federal Open Market Committee kicked in on Saturday.
The week will end with the release of Personal Consumption Expenditure (PCE) Price Index – Fed’s preferred inflation gauge – for September.
At 4:38 a.m. ET, Dow e-minis 1YMcv1 were down 63 points, or 0.19%, S&P 500 e-minis were down 5.5 points, or 0.13%, and Nasdaq 100 e-minis were down 15 points, or 0.1%.
In premarket trading, Roivant surged 16.8% after Switzerland’s Roche ROG.S said it will buy Telavant, a developer of a new treatment for inflammatory bowel diseases, for an initial USD 7.1 billion from Roivant and Pfizer Inc.
Salesforce dipped 1.4% as Piper Sandler cut the rating on the stock to “neutral” from “overweight”.
(Reporting by Shubham Batra; Editing by Nivedita Bhattacharjee)
This article originally appeared on reuters.com