Inventory futures are falling barely as traders put together for extra volatility in September
Stock futures were lower on Friday as investors remain cautious on a resurgent Covid virus, a meeting of the Federal Reserve next week, and a historic trend for September to be a weak month for stocks.
Dow futures lost 22 points. S&P 500 futures lost 0.1% and Nasdaq 100 futures lost 0.1%
History is not on the market’s side as the S&P 500 posted an average decline of 0.4% in September, the worst of all months, according to Stock Trader’s Almanac. A historically weak period for equities begins on Friday in particular, as September losses typically occur in the second half of the month.
Part of the volatility that occurs in September is often related to what is known as the quadruple witching that takes place on the last Friday. This is the expiration of stock index futures, stock index options, stock options, and single stock futures.
“We expect volatility to increase over the next month, fueled by a seasonal increase in investor uncertainty, persistent virus uncertainty, and significant monetary and fiscal catalysts,” said John Marshall, director of derivatives research at Goldman Sachs, in a press release from Friday. Marshall cited data showing that the volatility of the S&P 500 typically increased 27% from August through October.
Still, stocks go into Friday with modest gains for the week. The Dow is up 0.41% and the S&P 500 is up 0.34% since Monday. The Nasdaq Composite is up 0.44% this week. Stocks are in the red for the month. The Dow was down 1.7% in September. The S&P 500 is 1.1% behind this month but still only 1.6% from its all-time high. The Nasdaq is down 0.5% this month.
On Thursday, the Dow Jones Industrial Average lost 63 points after falling 274 points from its low. The S&P 500 lost 0.16%. The Nasdaq Composite outperformed, up 0.13% as Netflix, Microsoft and Amazon all closed in the green.
The Census Bureau reported Thursday that August retail sales were up 0.7% for the month, up from a Dow Jones estimate of a 0.8% decline. However, after the first estimate for July was revised sharply downwards, the sales blow in retail came from a plus of 0.5% compared to the previous month to a decline of 1.8%.
A separate economic report showed that weekly jobless claims rose to 332,000 for the week ending September 11, according to the Department of Labor. The Dow Jones estimate was 320,000.
“It is widely believed that the economy is slowing under the weight of the Delta variant. Combined with a bad historic stock market season in September and persistent inflation fears, investors have recently become cautious,” said Jim Paulsen, chief investment strategist at Leuthold Group. “With economic growth unexpectedly picking up again, investors are wondering whether they have been too cautious about keeping an offer below the entire stock market.”
The Federal Reserve will meet for two days next week and is expected to provide further guidance on Wednesday as to when it might slow down its $ 120 billion monthly bond purchases, which helped the recovery but may also have contributed to a surge in inflation. Fed chief Jerome Powell has said tapering could happen this year, but investors are waiting for more details. Some investors fear a fall in asset prices as the central bank begins to lift its loose policy.
Invesco’s shares rose after the Wall Street Journal reported that the asset manager is in talks about a merger with State Street’s asset management business. Invesco, which manages approximately $ 1.5 trillion, rose 7% in pre-trading.