Stock-index futures pointed to a softer start for Wall Street Monday after equities ended last week on a strong note, with investors looking past a surge in unemployment that pushed the unemployment rate soaring.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YM00, -0.68% fell 144 points, or 0.6%, to 24,142, while S&P 500 futures ES00, -0.71% were down 18.40 points, or 0.6%, at 2,910. Nasdaq-100 futures NQ00, -0.36% declined 25.75 points, or 0.3%, to 9,192.50.
Stocks posted back-to-back gains Thursday and Friday that left the Dow DJIA, +1.90% up 2.6% for the week at 24,331.32, while the S&P 500 SPX, +1.68% saw weekly rise of 3.5% to 2,929.80. The Nasdaq Composite COMP, +1.57% jumped 6% last week to 9,121.32.
Equities have bounced back strongly after the S&P 500 dropped by roughly a third from a February record high through March 23. Friday’s close left the Dow 17.7% below its all-time finish, while the S&P 500 is 13.5% below its record close and the Nasdaq is 7% away from its record finish.
What’s driving the market?
Stock-index futures opened near unchanged Sunday night and have since drifted lower, with analysts finding little in the way of obvious catalysts for the softer tone. Some near-term consolidation may be in order after equities ended last week on a strong note, looking past Friday’s April U.S. jobs report, which saw the economy shed more than 20 million jobs and the unemployment rate surge to 14.7%.
A slowdown in the rate of COVID-19 infections and efforts toward reopening parts of the U.S. economy have fueled expectations the economy will see a V-shaped rebound, though analysts cautioned that a rise in infections in some parts of the country cast doubt on that scenario. Bulls also point to a ramp up in federal spending aimed at cushioning the economy. Even more so, investors have argued that efforts by the Federal Reserve to backstop lending and ensure market functioning have fueled the rebound.
Skeptics contend the reaction so far is pricing in a best-case scenario.
Read:A ‘much more severe’ selloff looms in the stock market, strategist warns
“How long risk assets supported by unconventional policies can defy the real economy remains an open question for now. But from where valuations are standing, it seems a lot of the good news is already priced in, and in my opinion, the best-case scenario is to see some sort of consolidation around current levels,” said Hussein Sayed, chief market strategist at FXTM, in a note.
“Until confidence returns to the real economy, the rally in risk assets will not be sustainable and investors will need to reconsider their positions at some point soon,” he said.
Earnings season, meanwhile, moves into its final stretch; 85% of S&P 500 companies had reported first-quarter results through Friday. The pandemic has taken a toll, with aggregate earnings on track to fall about 13.6% from a year ago, the worst performance since the third quarter of 2009, according to FactSet Senior Earnings Analyst John Butters. That’s compared with expectations for 4.5% growth at the start of the first quarter.
Earnings Watch:Take a breath as earnings slow, but you may want to avoid the numbers to stay calm
What companies are in focus?
- Shares of Tesla Inc. TSLA, +5.04% were down 3.3% in premarket trade after founder Elon Musk on Saturday tweeted he would move the Silicon Valley car maker’s headquarters and operations out of California as the company’s main car-making factory remains closed due to the pandemic. Musk also followed through on a threat to sue Alameda County, where its Fremont plant is located.
- Shares of Coty Inc. COTY, +5.47% jumped 6.7% in premarket trading, after the beauty company announced that KKR & Co. KKR, -0.85% had made a $750 million equity investment, while also reporting a surprise fiscal third-quarter loss and revenue that fell more than forecast.
- AMC Entertainment Holding Inc. AMC, +2.75% shares were up nearly 30% in premarket action after the Daily Mail reported that Amazon.com Inc. AMZN, +0.50% had showed interest in acquiring the movie-theater chain.
Add Comment