U.S. stock futures tumbled on Monday as investors digested a mixed bag of economic data, signaling a potential shift in the market's trajectory. What this really means is that the tailwinds that have been propelling the markets higher may be starting to lose some steam.
GDP Growth Loses Steam, PCE Inflation Heats Up
The Commerce Department reported that U.S. economic growth slowed sharply to a 1.4% annualized rate in the fourth quarter of 2026, well below the 3% pace that economists had expected. This marked a significant deceleration from the previous quarter's robust 4.4% expansion. Reuters reports that the slowdown was driven by disruptions from the government shutdown and a moderation in consumer spending.
Adding to the concerns, the Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) price index, unexpectedly accelerated in December, rising 0.4% month-over-month. This suggests that inflationary pressures may be proving more persistent than previously thought, potentially complicating the central bank's efforts to cool the economy. Benzinga has the full details.
Market Sentiment Shifts as Optimism Fades
The combination of slowing economic growth and rising inflation has clearly rattled investors, with major stock indexes futures pointing lower in early trading. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all opened in the red, reflecting a broader shift in market sentiment.
The bigger picture here is that the market's recent run of gains may be facing headwinds. As Yahoo Finance reports, the cooling GDP and hotter-than-expected inflation data have dented the optimism that has buoyed stocks in recent months. Investors will be closely watching the Fed's next moves as it navigates this delicate balance between growth and price stability.