Dow futures flip unfavorable as markets attempt to shake the September lull
Futures contracts pegged to the Dow Jones Industrial Average turned negative on Wednesday after the blue chip index fell nearly 300 points on Tuesday, the last in a series of negative trading sessions in September.
Dow futures lost about 20 points. S&P 500 futures traded near the flatline and Nasdaq 100 futures rose 0.1%.
US stock futures had rallied overnight but gave up gains on Wednesday morning.
Markets have been panicked so far this month as investor worries grew over the next move by the Federal Reserve over the Delta variant that could wreck the economic recovery.
The Dow, S&P 500, and small-cap Russell 2000 indexes were down six of the last seven days. Tuesday marked the fifth consecutive loss day for the Nasdaq. In September the Dow was down more than 2% and the S&P 500 was down 1.8%.
“Despite concerns over the recent slowdown in economic and economic momentum, we remain confident that strong growth is imminent and activity will pick up again,” JPMorgan strategist Dubravko Lakos-Bujas wrote in a statement on Wednesday. “We remain positive on the equity outlook and expect the S&P 500 to hit 4,700 by the end of this year and surpass 5,000 next year with better than expected gains.”
Microsoft shares surged more than 1% in pre-IPO trading after announcing a dividend increase and sizable $ 60 billion share buyback program.
Energy stocks, which have been popular bets for investors hoping for a strong economic recovery, gained in pre-trading when WTI crude topped $ 71. Exxon added about 1%.
Apple shares rebounded slightly in pre-market trading after stocks fell on Tuesday following the launch of a new iPhone and other products.
Casino stocks like Las Vegas Sands and Wynn Resorts were again in the red in the premarket. Those names were hit hard on Tuesday as the Macau government tries to tighten government controls on casinos and Chinese health officials reported an outbreak of Covid-19.
In Tuesday’s regular trading, the Dow fell 292.06 points, or 0.8%, to 34,577.57, falling after a five-day losing streak on Monday. The S&P 500 was down 0.6% to close at 4,443.05 and the Nasdaq Composite was down 0.5% to 15,037.76.
September was historically a weak month for the markets, which have seen an average decline of 0.56% per month since 1945, according to the CFRA. And after eight months of profits, strategists say a big pull-out could be imminent.
The S&P 500 has risen throughout the year, falling only once below the 50-day moving average, according to Fundstrat. Mike Wilson, chief investment officer at Morgan Stanley, told CNBC’s Fast Money that this might just be the beginning.
“The mid-cycle transition always ends with a correction in the index,” he said of the S&P 500. “Maybe it will be this week, maybe a month from now. I don’t think we can handle this year. However, the 50-day moving average holds up year-round because that’s the pattern we usually see during this part of the recovery period. “
On Tuesday, the Labor Department released pre-bell data showing less than expected spike in US inflation for the month of August. Consumer prices rose 5.3% yoy and 0.3% yoy. Excluding food and energy, the consumer price index rose just 0.1% for the month.
Initially, the markets recovered, but turned down again after the market opened, as uncertainty arose about when the US Federal Reserve would curb securities purchases.
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