Stock Futures Higher After S&P and Dow Ended Last Week in Decline

24 May 2021 · 3rd Party Analysis

Stock Futures Higher After S&P and Dow Ended Last Week in Decline


In Summary

  • Stocks moderately higher before the opening of Monday’s session
  • Investors remain worried over Fed’s position toward the heating economy

Stock Futures Higher After S&P and Dow Ended Last Week in Decline

US equities are pointing higher in pre-market trading on Monday. Futures contracts on all three major indexes are in the green by at least 0.20%, led by Nasdaq futures, up almost 0.50%. S&P futures and Dow futures are higher by roughly 0.40% and 0.35%, respectively.

Monday’s positive sentiment in stocks comes after a losing week for the S&P500 and the Dow Jones Industrial Average. The broad-based S&P500 index posted its first back-to-back weekly loss since February, falling 0.4% last week. The blue-chip Dow Jones dropped 0.5% on the week. The Nasdaq Composite eked out a slight gain of 0.3% for the week, breaking a four-week losing stretch.

The turbulent week marked by highly volatile sessions continued into the late hours of Friday’s trading. Major stock indexes looked set to lock in some green points on Friday, but near the end of the session market participants started unloading tech stocks and other growth-centered shares, causing Apple, Tesla, and Amazon to slip by over 1% each.

The turnaround came at the same time bitcoin’s move lower accelerated after a statement that Chinese authorities have called for a crackdown on mining and trading. The regulatory clampdown by China knocked over 12% off bitcoin’s price, while ether declined 19%. Bitcoin traded below $35,000 on Friday and ether reached around $2,200. The sell-off in cryptos was prompted by a statement from Chinese Vice Premier Liu He, who pledged to “crack down on bitcoin mining and trading behavior”.

Panic Selling as Crypto Market Nosedives

The significant drop in the crypto market erased more than 50% of bitcoin’s price since it reached an all-time high in mid-April. During the weekend, bitcoin slipped toward $30,000, marking a 52% decline from the peak near $65,000 on April 14.

As the crypto market nosedived last week, the panic selling could have partially rippled into traditional markets as investors remain concerned over the high valuations of asset classes and the lingering inflation pressures.

Value stocks on Friday held on to their gains as the Dow ended the day in positive territory, buoyed by investors who favored economically sensitive companies. The Dow Jones Industrial Average sealed Friday’s trading with a gain of 0.36%, or 123.69 points, to 34,207.84. The S&P500 ended virtually flat, but to the downside by 0.08%, or 3.26 points, at 4,155.86. The tech-focused Nasdaq Composite slipped the most, erasing 0.48%, or 64.75 points, to finish the session at 13,470.99.

Choppy trading has been narrating the stock market in the past few weeks. Investors are growing more nervous over the Federal Reserve’s hands-off approach to the economy, causing it to overheat due to the continuous inflow of monetary stimulus. Excessive supply of cash swishing around the US financial system is threatening to raise prices to levels significantly above the Fed’s target of 2%. Since April’s consumer price data showed inflation spiked to 4.2%, the highest figure since 2008, market participants have been eager to hear whether the Federal Reserve will recalibrate its policy toolkit.

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