Inventory futures greater after Dow, S&P misplaced 5 days in a row
US stock index futures were positive during early morning trading on Monday as the S&P 500 had its longest daily losing streak since February.
Futures contracts linked to the Dow Jones Industrial Average rose 169 points. S&P 500 futures and Nasdaq 100 futures both traded in positive territory.
All three futures contracts were previously subdued as investor sentiment may have been hurt by heavy losses in Asian trading on Monday, where the Hong Kong Hang Seng index fell about 2% on regulatory fears for sectors like financial technology and electric vehicles.
All three major averages finished lower on Friday, with the Dow and S&P recording their fifth consecutive day of losses while the Nasdaq Composite recorded its third consecutive negative price.
For the week, the Dow and S&P were down 2.15% and 1.69%, respectively, the worst weekly performance averages since June. Tech-heavy Nasdaq had its worst week since July, down 1.61%.
Data released on Friday showed that producer prices rose 0.7% in August and 8.3% year-over-year, the largest annual increase since records were first recorded in November 2010.
The closely watched consumer price index will be released on Tuesday. At that point, the road will see how much of the increased cost is passed on to consumers. Economists surveyed by FactSet assume that consumer prices rose by 5.3% annually in August. The retail sales data will be released later in the week.
“Delivery bottlenecks, inventory shortages, higher raw material prices and higher shipping rates have all contributed to higher input costs,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “[Friday’s] Wholesale price data should open the Fed’s eyes as inflationary pressures still do not seem to be easing and are likely to be felt by consumers in the months ahead, “he added.
Stocks have been under pressure since the Labor Department’s August job report released on September 3 missed expectations. The market is buzzing with concerns that the pandemic will continue to stifle economic growth, while hot inflation will drive the Federal Reserve to act.
“The negative impact of the delta on cyclical trading is clear,” noted Jefferies strategists. “It’s becoming increasingly evident that the effects of the Delta have delayed any attempt by the Federal Reserve to throttle, as well as giving new impetus to big tech stocks, with growth that has outpaced this quarter so far Has.”
The Federal Reserve will begin its two-day monetary policy meeting on September 21, during which investors will look for clues about the central bank’s bond-buying program.
Despite last week’s losses, the large averages are still relatively close to their record highs. the Dow is 2.87% below its all-time high, while the S&P is 1.92% below its high. The Nasdaq Composite, meanwhile, is down 1.87% from its record.
For the year, all three have posted double-digit percentage gains, but the ongoing effects of Covid-19 could slow the pace of recovery.
“The prospects for economic growth after the pandemic have cooled in time for the fall,” Goldman Sachs said in a statement to its customers on Friday. “Within the market, prices have been reflecting the weakening economic environment for months,” the company said. Last week, Goldman lowered its fourth quarter GDP growth forecast, citing the impact of the Delta option on consumer spending.
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