Stock futures drop after best week for S&P 500 since June

Stock futures traded lower on Monday after the S&P 500 posted its biggest weekly gain in nearly five months on the back of easing inflation data.

Dow Jones Industrial Average futures were down 88 points, or 0.3%. S&P 500 futures are down 0.4%, and Nasdaq 100 futures are down 0.7%.

The S&P 500 rose 5.9% last week in its best week since June. Investors cheered a softer-than-expected inflation reading and bet the Federal Reserve will soon slow its aggressive tightening campaign.

“There has been a marked shift in the market, with investors increasingly taking risks across asset classes,” said Mark Hackett, head of investment research at Nationwide. “Technical indicators have improved significantly, with investor sentiment, momentum, breadth, and risk factors showing a marked improvement.”

The high-tech Nasdaq Composite rose 8.1% last week for its best week since March, while the benchmark Dow Jones advanced 4.2%.

Cboe . Volatility Index, known as the Wall Street Fear Scale or VIX, fell one point to 22.5, hitting its lowest level since August. VIX, which tracks the S&P 500’s 30-day implied volatility, has been trading above the 30-point threshold for most of October.

However, the Fed has given few indications that it may deviate from its hawkish course anytime soon. Fed Governor Christopher Waller said Sunday, “We’re at a point we can start thinking about maybe going to a slower pace.” But, “We’re not easing. … stop paying attention to the pace and start paying attention to where the end point is going to be. And until we bring down inflation, that end point is still the paths.”

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Investors also digested the news on the political front over the weekend. The Democrats will retain control of the Senate In the 2022 midterm elections, NBC News predicted. The party will hold at least 50 seats after Senators Mark Kelly of Arizona and Catherine Cortez Masto fended off the challenges.

Meanwhile, the third-quarter earnings season is set to continue, with a heavy focus on retail. Tyson Foods will announce results the Monday before the bell. Major retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are due to publish numbers this week.

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