Stock futures opened in slightly negative territory Monday evening, holding lower after a further rise in commodity prices escalated concerns over inflation heading into corporate earnings season.
Contracts on the S&P 500 ticked down. The index ended Monday's session in the red, weighed down by a drop in the communication services and utilities sectors. Both the Nasdaq and Dow also fell.
Energy and commodity prices, meanwhile, extended a swift march higher. U.S. West Texas intermediate crude oil futures set a fresh seven-year high and topped $82 per barrel during Monday's session, with supply constraints and elevated fuel demand pushing prices higher. Outside of oil, aluminum prices increased to their highest level since 2008, and copper prices also built on recent gains.
For investors, the broad rise in commodity prices has threatened to exert further pressure on corporate margins. Companies have already been grappling with a host of supply-side challenges, including port congestion and labor scarcities, that are expected to drag on profit growth heading into third-quarter earnings season later this week and over the next month. The Labor Department's August Job Openings and Labor Turnover survey — due for release Tuesday morning — is expected to reflect yet another record number of workplace vacancies.
And rising interest rates have also raised the specter of higher borrowing costs for companies, with the 10-year yield holding above 1.61% on Monday for its highest level since June.
"We're definitely freaked out about crude oil prices … [and] about slightly higher interest rates," David Bailin, Citi Private Bank chief investment officer, told Yahoo Finance. "But we have to put all of this in context. First of all, interest rates have been abnormally low. Energy prices are high due to excessive demand right now and delivery shortages across Europe and now in China … These things will abate. We think it'll take somewhere between three and nine months for energy supplies and for the shipping issues to abate."
Other strategists also suggested that investors look through the near-term supply-related challenges facing the markets.
"We're going to have supply issues for a little bit longer here, but I think that'll just work its way through," Jeremy Bryan, portfolio manager for Gradient Investments, told Yahoo Finance Live on Monday. "The nice part about the U.S. economy and markets in general is they usually follow what the U.S. consumer does, and the U.S. consumer wants to spend. And that's why we're still positive on the markets."
6:10 p.m. ET Monday: Stock futures edge lower
Here's where markets were trading Monday evening:
S&P 500 futures (ES=F): -2.25 points (-0.05%), to 4,348.75
Dow futures (YM=F): -12 points (-0.03%), to 34,364.00
Nasdaq futures (NQ=F): -6.5 points (-0.04%) to 14,694.00
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2021. REUTERS/Brendan McDermid
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter