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Inventory futures slide after Dow, S&P 500 broke new information

A street sign on Wall Street will be displayed in front of the New York Stock Exchange (NYSE) in New York, United States on Thursday, February 11, 2021.

Bloomberg | Getty Images

Futures contracts, which are pegged to major U.S. stock indices, fell overnight during the Sunday night session, suggesting that Wall Street may experience subdued trading on Monday after breaking new records last week.

Dow futures lost 35 points, while contracts linked to the S&P 500 and Nasdaq 100 fell 0.2% and 0.3%, respectively.

The lukewarm move in the futures market on Sunday followed another record close for the Dow Jones Industrial Average on Friday when it gained nearly 300 points and ended at 33,800.6. The S&P 500 gained 0.8% and reached its third record in a row.

Stocks linked to the recovering economy drove many gains over the past week as vaccination efforts accelerated in the US. Both the Dow and S&P 500 were up at least 2% last week. The Nasdaq was up 3.1% over the same period as some traders snapped up big tech names.

The earnings reporting season for the first quarter kicks off this week with expectations for generally positive news and an uptrend for US equities thanks to a rebounding economy. Many of the country's largest banks, including Goldman Sachs and JPMorgan Chase, will be releasing results for the three months ended March 31st this week.

The week ahead is also filled with Fed speeches and key economic data, including a highly anticipated inflation reading on Tuesday, when the consumer price index is released.

Central Bank Chairman Jerome Powell opened the week with several Fed appearances with an interview that aired on CBS News on "60 Minutes" on Sunday evening.

During the interview, Powell reiterated that the Fed would like inflation to rise above 2% for an extended period of time before officials hike rates.

"We want inflation to rise to 2% – and we mean that we don't just tap the base once on a sustainable basis," he said. "But then we also want it to be on the right track to move moderately above 2% for a while."

He added that the U.S. economy appears to be at a turning point amid an accelerated rollout of Covid-19 vaccines and strong tax support. "What we are seeing now is really an economy that appears to be at a tipping point," he said.

Powell will also speak at an Economic Club of Washington event on Wednesday.

Investors will also be keeping an eye on President Joe Biden's efforts to advance a key infrastructure proposal known as the American Jobs Plan. Biden, who along with fellow Democrats has promised a major infrastructure overhaul in the 2020 election, will meet with a bipartisan group of lawmakers Monday to convince Capitol Hill to support the $ 2 trillion package.

Congress will return to Washington this week and hold its proposal for the first time since Biden's proposal, which will allocate hundreds of billions of dollars to roads, bridges, airports, broadband, electric vehicles, housing and vocational training.

"A positive fiscal shock, strong residential tailwind, a large stock of savings and the fact that the Fed is pushing inflation above 2% mark a fundamentally different economic backdrop," Dennis DeBusschere, equity strategist at Evercore ISI, wrote in one E-mail. "The US data is expected to be strong this week and US vaccinations to increase. Real rates are still too negative and rising, which supports the risk factor's outperformance."

The president's plan would also raise the corporate tax rate to 28% and put in place other overseas tax avoidance strategies.

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