Stock Futures Unnerved as Investors Fear Slowdown in Growth

08 Sep 2021 · 3rd Party Analysis

Futures Turn Lower as Investor Worries Halt Rallying Stocks

WRITTEN BY ThorFX

In Summary

  • Stock futures slide ahead of Wednesday’s trading as recovery concerns grip the markets
  • St Louis Fed President Bullard says labor-market growth remains robust, calls for quick tapering

US futures turned sharply lower early on Wednesday after market participants became increasingly concerned the economic expansion could run to a halt. Futures contracts on the Dow Jones Industrial Average slipped almost half a percent or about 150 points. S&P500 futures and Nasdaq futures were negative by about 0.3% each.

Dow Jones & S&P500 Lower as Nasdaq Advances

The weak futures performance before the opening bell in New York on Wednesday followed a largely disappointing regular market session a day earlier. On Tuesday, the 30-stock Dow Jones declined roughly 270 points, dragged lower by industrial stocks and other economically sensitive shares.

The S&P500 index tumbled about 0.3% in a quiet trading environment. The tech-oriented Nasdaq Composite advanced less than 0.1%, closing at a new all-time high on its fourth straight day of gains.

Could Stocks See More Volatility Ahead?

As the month of September unfolds, traders are growing nervous over the rich valuations of stocks across the board. Market jitters prevail over stock prices coupled with expectations for tapering from the Federal Reserve could mean heightened volatility and wider fluctuations ahead for investors.

While investors are already speculating about the outcome of the Federal Reserve’s policy meeting on Sept. 21-22, several high-ranking Fed officials will provide their take on the monetary policy prior to the regular gathering.

James Bullard, President of St Louis Fed, suggested the US central bank should push forward with its tapering plans that would reduce the massive cash injections of $120bn in monthly asset purchases. Speaking to the Financial Times, Mr. Bullard praised the progress of the US economy and said there was no reason for delaying the stimulus reversal.

The Labor Market Outlook

“There is plenty of demand for workers and there are more job openings than there are unemployed workers,” James Bullard told the Financial Times. “If we can get the workers matched up and bring the pandemic under better control, it certainly looks like we’ll have a very strong labor market going into next year.”

Mr. Bullard dismissed the view that the labor-market growth was slowing, even after the US Labor Department said the economy created just 235,000 new jobs in August, short of expectations for 720,000.

“The big picture is that the taper will get going this year and will end sometime by the first half of next year,” the St Louis Fed President commented. “When you’re in a crisis, you have to be prepared for twists and turns. These numbers are going to bounce up and down,” he added, referring to the difference between the latest non-farm payrolls report and the 1.1 million new jobs created in July.

On Wednesday, in an otherwise uneventful day for the market, New York Fed President John Williams will appear at St. Lawrence University to deliver remarks on the economic outlook and monetary policy.

Meanwhile, European bourses today are floating deep into negative territory. Major stock benchmarks slipped right out of the gate with the region-wide Stoxx 600 falling more than 1%.

Crypto’s Staggering Losses

Bitcoin and other cryptocurrencies struggle to push higher after staggering losses across the board roiled the fledgling market on Tuesday. The original cryptocurrency is now trading around $45,000 per coin, down about 3% on the day.

Bitcoin slipped as much as 17% to a session low on Tuesday. Yesterday was the day when El Salvador, the small Latin American country, rolled out bitcoin as an official legal tender and a national currency.

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