A trader works on the floor of the New York Stock Exchange (NYSE) in New York, USA on Monday, August 23, 2021.
Michael Nagel | Bloomberg | Getty Images
Dow Jones Industrial average futures rose slightly on Monday as investors looked to a sustained economic recovery with US Covid cases falling.
However, gains were limited as traders prepared for the final week of a volatile September. Tech stocks were lower.
A possible government shutdown at the end of the week also weighed on sentiment.
Futures on the Dow gained 112 points, or 0.3%. The S&P 500 futures rose slightly and the Nasdaq 100 futures lost 0.2%.
Stocks related to the economic comeback drove the price gains ahead of the market as the U.S. Covid cases continued to spread. There were an average of 114,000 new cases in the last 7 days through Friday, up from a 7-day average of about 160,000 cases at the height of that latest wave in early September, according to the CDC.
Carnival Corp was up 2% in pre-market trading and United Airlines was up 1%.
Exxon Mobil and Occidental Petroleum led energy gains as WTI crude oil continued its run in September, topping $ 74 a barrel.
The 10-year government bond yield rose on economic optimism and topped 1.49% on Monday. This is the highest since June and an increase of 1.30% at the end of August.
Technology stocks, on the other hand, have come under pressure as investors ditched higher-valued stocks with rising yields. Alphabet, Apple and Nvidia were lower in pre-trading hours, which weighed on futures for the S&P 500 and Nasdaq.
Government shutdown?
Investors watch progress in Washington as lawmakers try to prevent a government shutdown, US debt default, and the possible collapse of President Joe Biden’s broad economic agenda.
House spokeswoman Nancy Pelosi said Sunday that she expects the $ 1 trillion bipartisan infrastructure bill to be passed this week, but voting on the bill could be postponed from its original schedule on Monday.
Congress must pass a new budget by the end of September to avoid a shutdown, and lawmakers must also find a way to raise or suspend the debt ceiling in October before the US defaults on its debts for the first time.
“DC will attract more attention in the coming weeks as the political rationale surrounding infrastructure bills and the debt ceiling debate are likely to guarantee some market-moving headlines,” wrote Tavis McCourt, institutional equity strategist at Raymond James.
Wall Street is having a rollercoaster week amid a series of worries ranging from China’s real estate giant Evergrande’s debt crisis to the Federal Reserve’s signal to pull back monetary stimulus to Beijing’s crackdown on cryptocurrencies. Still, the large averages at the beginning of the week managed to offset steep losses and make small gains.
The blue-chip Dow ended the week 0.6% higher, breaking a three-week losing streak. The S&P 500 was up 0.5% for the week, while the tech-heavy Nasdaq Composite was up 0.02% last week.
“The market rally has shown that the buy-the-dip mentality remains,” said Mark Hackett, director of investment research at Nationwide.
So far, September lives up to its reputation for volatility and weakness as the major averages all posted modest losses. The S&P 500 is back 1.5% and is well on its way to seeing its first negative month since January. The broad equity benchmark is about 2% below its record high September 2. The Dow is down 1.6% for the month while the Nasdaq is down 1.4%.
But overall, investors continue to buy the dip for stocks. The S&P 500 fell up to 4% from its high during the month before reversing. According to Goldman Sachs, Friday was 224 trading days since the last 5% pullback, the eighth longest streak since 1930.
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“We remain cautious in the short term, especially as we enter the weakest season of the year (late September – mid-October),” said Larry Adam, CIO at Raymond James, in a press release. “However, given the continued robust economic growth, our tendency is to hold existing equity exposures or to increase them opportunistically when weak.”
Elsewhere, Bitcoin rebounded about 2% to $ 43,454 after falling 5% on Friday. The sell-off came after China’s central bank made all cryptocurrency-related activities illegal.
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