Stock futures pointed to a lower open Monday morning, with the S&P 500 and Dow looking to retreat from record levels. 

Contracts on the Dow dropped about 70 points, or 0.2%, after the index rallied to an all-time high of more than 34,000 last week. S&P 500 futures also dipped below the index's record high, and Nasdaq futures edged lower. The 10-year Treasury yield steadied below 1.6%. 

For equities, however, volatility has subsided considerably in recent sessions. The CBOE Volatility Index, or VIX, hovered near a 14-month low as stocks remained close to all-time highs.

"The S&P 500 has reached new highs while volatility has sharply declined. Low volatility has outweighed low correlations among stocks, driving return dispersion back below the long-term average," David Kostin, Goldman Sachs chief U.S. equity strategist, said in a note Monday.

"As the U.S. moves beyond key macro events such as the 2020 election, the $1.9 trillion fiscal stimulus package, and peak economic activity, we expect three defining themes for markets will be tax reform, infrastructure, and pricing power," Kostin said.

"The details of tax reform will drive wide variation in the size of the hit to company earnings, while only certain companies are likely to be direct beneficiaries of infrastructure spending," he added. "Similarly, the effect of rising input costs will vary depending on company margin profiles and ability to pass through costs to end consumers. These micro-driven catalysts should keep stock correlations low, but a return to a high dispersion environment will be challenging without an increase in volatility."

Corporate earnings season will accelerate this week, with companies including Netflix (NFLX), Johnson & Johnson (JNJ), Snap (SNAP) and Intel (INTC) poised to report results. So far, about 9% of S&P 500 companies have reported first-quarter earnings results, with 81% of these companies having beaten expectations – matching the record high beat rate from 2008. 

"It’s not just cost-cutting delivering these results," Nicholas Colas, co-founder of DataTrek Research, said in a note Monday. "Revenue surprises are also at record levels: 84% of reporting companies have beaten top line expectations (old record in Q3 2020, 79%) and the mean revenue beat is 3.3 points ahead of Wall Street’s models (old record 2.9 points in Q4 2020)." 

"Q1 2021 corporate earnings reports thus far are showing both upside revenue surprises and solid incremental earnings leverage from those top-line beats," he added. "We have been relying on the latter to support our positive view on U.S. large caps, but it’s nice to see the former as well." 

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