Stock Futures Are Flat But the Market Underneath Them Is Anything But — What This Week’s Numbers Are Really Telling Us

Watching stock futures trade flat on a Monday morning after the kind of week markets just had is almost unsettling. On Friday alone, the Dow dropped 793 points, falling into correction territory and joining the Nasdaq, which had already surpassed that mark the day before. The S&P 500 locked in its fifth consecutive weekly decline, the longest such losing streak in almost four years, closing at a seven-month low of 6,368.85. And yet here are the futures, barely moving in the early hours of Monday morning. Dow futures are up just 76 points. Nasdaq 100 futures increased by less than a third of a percent, while S&P 500 futures increased by roughly 18%. It’s the kind of stillness that feels more like a held breath than calm.
The context is very important. The March jobs report is released that morning despite the trading week being shortened due to the holiday (the market closes on Friday for Good Friday). This unusual arrangement tends to condense the emotional reaction into fewer trading sessions. Additionally, earlier in the week, investors will be watching the ADP Employment Survey and the Job Openings and Labor Turnover Survey. These readings carry more weight than they would under normal circumstances in a setting where every data point lands in a market already stretched thin from five weeks of losses and an Iranian war that shows no signs of ending.

Monday morning’s flatness in the futures comes after Asia-Pacific markets did anything but. The Kospi fell more than five percent in South Korea. The Nikkei 225 in Japan dropped by almost 4%. The ASX 200 in Australia fell 1.46 percent. The Hang Seng in Hong Kong fell 1.52 percent. The Bank of Japan’s March meeting minutes, which were made public in tandem with the market movements, highlighted growing concerns that the central bank might lag behind on inflation, in part because rising oil prices brought on by the Middle East conflict are adding pressure that the BOJ did not anticipate. The Iran war is now in its fifth week, and the Houthis announced over the weekend that they had fired missiles at Israel, marking their first direct engagement in the conflict and indicating that the conflict’s geographic scope is growing rather than shrinking.

The pressure valve that allows all of this to enter every other market is oil. In premarket on Monday, WTI crude was trading at about $101 per barrel. Brent was close to $108. When those figures are maintained at this level for an extended length of time, they start to alter the calculations for everything from airline profitability to Federal Reserve rate decisions to the cost of shipping goods across supply chains that are still recovering from previous shocks. Gold futures increased by almost 1% to $4,536, continuing the trend of investors aiming for assets that do not move in tandem with the rest of the portfolio. Last week, the market’s fear gauge, the VIX, ended the day at 31.05, up more than thirteen percent. Although it spiked above 80 in 2020, 31 is high enough to suggest that professional investors are spending real money to protect themselves from further declines.
In a Friday interview on CNBC’s Closing Bell: Overtime, Cameron Dawson, chief investment officer at NewEdge Wealth, provided what may be the most helpful framing of the current situation. “If you look at the degree of the downside and how correlated all those stocks have been, it’s likely that we are throwing the baby out with the bathwater,” she stated. If you have the self-control to look past the fear, the argument she was making—that the sell-off has been indiscriminate enough to drag down quality names along with legitimately pressured ones—is worth considering because it implies that the current market is creating both opportunities and risks. When oil is over $100, Asia is declining by 5%, and no one can predict with certainty when the Strait of Hormuz will reopen, that is a truly challenging task.
As this develops, the market seems to be in between processing what has already transpired and preparing for potential future developments. Investors have a condensed timeline in which sentiment can change dramatically thanks to the week’s data, which includes JOLTS, ADP, and the jobs report, which is released on a day when the market is closed. Additionally, Nike, McCormick, and Conagra have earnings due that, in different situations, would merit greater attention than they currently receive. Consumer goods earnings typically fade into the background during a week dominated by war, oil, and the upcoming Good Friday jobs report. That might be an error. These reports may offer some preliminary evidence in one direction or the other, but it is still unclear whether the larger market has fully priced in the consumer stress that is building beneath the surface.
Even though the futures are flat this morning, the week won’t be dull. It indicates that the week has not yet begun. Anticipation, which has a short shelf life in markets shaped by the Iran War and a jobs report landing into a closed exchange, is what is causing the stillness rather than a resolution.