Stock futures are lower after big averages hit a five-day winning streak

US stock index futures fell in early morning trading Wednesday after key averages withdrawn of record highs, breaking a five-day winning streak.

Futures contracts linked to the Dow Jones Industrial Average fell 113 points. S&P 500 futures and Nasdaq 100 futures also traded in negative territory.

During regular trading, the S&P decreased by 0.47%, while the Dow lose 85.79 points, or 0.24%. At the lows of the day, the 30-stock benchmark fell more than 260 points. The Nasdaq composite fell 1.21% for its worst daily performance since May 12. All three major averages closed Monday’s session at record highs.

“Risk sentiment is on edge as pressure on Chinese equities continues,” TD Securities wrote in a note to clients. “This comes at an inopportune time as markets are digesting the ubiquity of a growth fear,” the company added. The sell-off for Asian markets came amid an ongoing Beijing crackdown on technology and education companies.

A host of mega-cap tech names reported post-market quarterly results on Tuesday, including: Apple, which beat top- and bottom-line estimates and said iPhone sales are up 50% year over year. Google parent Alphabet also posted quarterly results, registered a 69% jump in ad revenue, while Microsoft beat profit despite a decline in revenue from the Windows division.

The busiest week of earnings continues on Wednesday with Pfizer, McDonald’s, Qualcomm, Facebook, Ford and paypal between the names on deck. Of the S&P 500 companies that have reported quarterly results to date, 89% have beaten earnings expectations, while 86% have beaten revenue expectations, according to data from Refinitiv.

Despite Tuesday’s dip, the large averages are still on track to end the month higher. The S&P is up 2.4% in July, while the Nasdaq Composite and Dow are up 1.1% and 1.6% respectively.

“While the delta variant has the potential to trigger renewed volatility in the near term, we don’t think it will pose a major threat to the bull market,” UBS wrote in a note to customers. “Overall, we remain optimistic about the outlook for the economy.”

The Federal Reserve kicked off its two-day monetary policy meeting on Tuesday. On Wednesday, the Federal Open Market Committee will release a statement, followed by comments from Chairman Jerome Powell at a news conference.

“We don’t expect any fireworks at this Fed meeting,” noted LPL Financial Fixed Income Strategist Lawrence Gillum. “But we expect the committee to move forward in discussing when and how to start removing the emergency-level monetary accommodation it has provided to markets.”

The meeting follows comments from the International Monetary Fund on Tuesday that inflation could end up being more than just transitory.

“We expect Jay Powell to reiterate that the winding-down discussion is ongoing, but it’s too early to announce a specific date when the initial curtailment of asset purchases will begin,” added Danielle DiMartino Booth, CEO and chief strategist at Quill Intelligence.

“We expect Jay Powell to recognize ongoing supply chain disruptions as a major driver of inflation, but we also expect him to cite examples of specific sectors that have seen relief on the cost front, such as timber and iron ore,” she said.

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