Pedestrians walk past Nasdaq on September 3, 2020 in New York.
Xinhua News Agency | Getty Images
Futures contracts linked to major US stock indices rose overnight Monday night after Wall Street started the week with modest losses.
Dow futures rose 117 points while contracts linked to the S&P 500 and Nasdaq 100 futures both traded in positive territory.
The moves in the overnight session came after continued weakness in technology stocks drove major indices down Monday.
The Dow Jones Industrial Average fell 54.34 points, or 0.2%, to 34,327.79. The S&P 500 lost 0.3% to 4,163.29 as the tech sector pulled back 0.7%. The Nasdaq Composite fell 0.4% to 13,379.05.
Big tech stocks fell earlier in the week, with Apple and Netflix each falling 0.9%. Microsoft lost 1.2% while Tesla fell more than 2% when famous investor Michael Burry revealed a large short position in the electric car maker.
Communication Services’ Discovery stock bucked this trend after AT&T announced on Monday that it would merge WarnerMedia, which also includes HBO, with Discovery. Discovery’s Class B stock rose nearly 14%, while AT&T ended the day slightly lower after hitting a record high at the beginning of the session.
High growth stocks have remained under pressure in recent sessions as investors fret whether an inflation spurt locks in or tips over, as the Federal Reserve expects. Extended inflation above the Fed’s 2% target could cause the central bank to tighten monetary policy and dampen stocks that outperform the market when interest rates are low.
“Rising inflation data has widened the gap between secular growth stocks, which depend on lower and longer interest rates, and value investments that require a steeper yield curve,” wrote Lisa Shalett, chief investment officer, Morgan Stanley Wealth Management.
“While markets expected the data to gradually change due to the economic reopening, the scope of the surprises was overwhelming, driving stock volatility and market indices up from all-time highs,” she added. “The imbalance between supply and demand for raw materials, manufactured goods and even labor explains much of the surge in inflation and supports the argument that the trend is temporary.”
Investors blamed this fear for the dismal performance of the S&P 500 last week, with the broad market index falling 4% by mid-week on rising inflation fears. The broad equity benchmark eventually rebounded, down 1.4% for the week.
The tech-heavy Nasdaq Composite, which is particularly sensitive to inflation fears, fell 2.3% last week. The blue chip Dow fell 1.1% over the period. All three benchmarks had their worst week since February 26th.
The Fed’s minutes of its last meeting, released on Wednesday, may provide some clues as to how policymakers are thinking about inflation.
Elsewhere, the first quarter earnings season ends with more than 90% of the S&P 500 companies reporting their results. To date, 86% of the S&P 500 companies have reported a positive EPS surprise, which is the highest percentage of positive earnings surprises since 2008 when FactSet began tracking this metric.
Walmart, Home Depot and Macy’s will all be making profits on Tuesday.
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