Dow futures lower as investors await midterm elections and inflation report

Traders work on the floor of the New York Stock Exchange (NYSE), September 6, 2022.

Brendan McDermid | Reuters

U.S. stock futures slightly fell on Sunday as investors looked ahead to a week packed with the Congressional midterm elections, as well as the latest consumer inflation report.

Dow Jones Industrial Average futures fell by 31 points, or 0.1%. S&P 500 and Nasdaq 100 futures was 0.15% and 0.25% lower, respectively.

Apple shares may fall after the tech company said iPhone production has been temporarily reduced because of Covid-19 restrictions in China.

Those moves follow Friday’s rally, when the Dow Jones Industrial Average gained nearly 402 points, or 1.3%. The S&P 500 rose 1.36%, and the Nasdaq Composite was 1.28% higher. Still, the major averages closed the week with losses. The Dow ended a four-week win streak on rate hiking fears.

Tuesday’s midterm election will determine which party will control Congress, and impact the direction of future spending. Democrats currently control the House, and have a majority in the Senate. A Republican sweep could signal greater support of oil and gas companies.

On the economic front, investors are anticipating Thursday’s CPI report will give further insight into the Federal Reserve’s efforts to squash inflation. A hot inflation report could signal to investors that a pivot from higher interest rates, for longer, could be further away than expected.

“[In] order for the equity and bond markets to match the post-peak inflation performance noted in the table, inflation needs to keep coming down — and at a faster pace than we’ve yet seen. Until the Fed signals the ‘pivot’ is near, things could remain challenging,” Baird’s Ross Mayfield wrote in a recent note.

Elsewhere, several companies are expected to report Monday including Palantir Technologies, Activision Blizzard, Lyft and Take-Two Interactive. Corporate earnings season is winding down with a majority of companies in the S&P 500 having reported results.