Stocks Retreat on First Trading Day of August, Futures Higher

03 Aug 2021 · 3rd Party Analysis

Stocks Retreat on First Trading Day of August, Futures Higher


In Summary

  • Wall Street equities slid on Monday as uncertainty prevailed, futures attempt to pare losses
  • Bitcoin pressured, while crypto traders expect a key upgrade to Ethereum’s network

US stocks reversed course on Monday as investors became wary of growing uncertainty about the Delta variant threatening to hamper recovery as cases are rising again. Overshadowing a robust earnings season, the Delta strain of Covid-19 has prompted investors to unload risk and to wait for a clearer economic outlook.

The Dow Jones Industrial Average briefly spiked to an intraday high but later momentum faded and the 30-stock index edged lower by 97.31 points, or 0.28%, to finish at 34,838.16. The S&P500 declined 8.10 points, or 0.18%, to end the session at 4,387.16. The Nasdaq Composite was the only performer in the green, logging a gain of 8.39 points, or 0.06%, to a close of 14,681.07.

Traders and investors have elevated their concerns about the sustainability of the growth rate of the US economy. Over the past few weeks, steadily rising Covid-19 infections have undermined the upbeat economic expansion, boosted by corporate profits.

US Covid cases on a seven-day average are creeping higher and reached over 85,000 on Monday, according to data from the Centers for Disease Control and Prevention. Yesterday, the rate of vaccination for adults with a single jab in the US surpassed the 70%-milestone, about a month behind President Joe Biden’s Fourth of July goal.

As the caution narrative is unfolding yet again on Wall Street, the yield on the 10-year Treasury notes slipped to 1.173% yesterday, from 1.239% on Friday. Bond yields move inversely to prices.

A Breakthrough On The Horizon for Infrastructure Package

Individual stocks, particularly in the tech sector, fared well compared with the broader market performance. Tesla pushed higher by $22.47, or 3.27%, to $709.67 a share. The square stock rallied $25.12, or 10%, to $272.38. The payments company led by Jack Dorsey agreed to buy Australia’s Afterpay in an all-stock deal valued at roughly $29bn. Afterpay provides a service that allows users to pay for goods in four, interest-free instalments while they receive the goods at the time of purchase.

In Washington, lawmakers are nearing a breakthrough in their pursuit of more help to the American economy. Solid progress over the $1tn spending package on infrastructure is expected to bring forward the passage of the bill by the end of the week. Once approved by Senators, the bipartisan legislation will be sent to the White House, awaiting Joe Biden’s signature.

Futures contracts tied to the major stock gauges are indicating a positive open at the bell on Tuesday. Dow futures lead the pack, higher by roughly 90 points, or 0.25%, as investors aim to erase yesterday’s losses. S&P500 futures are up about 0.20%, while Nasdaq futures gained a little over 0.15% in pre-market trading.

Bitcoin is under pressure for a third day today as the spotlight is now on Ethereum. A major upgrade to the Ethereum network is expected to happen on August 4. Prompted by expectations of a price increase, crypto traders piled into the ether over the last few days, while bitcoin’s price deflated. Bitcoin currently

trades at around $38,500, little changed on the day, while ether is gyrating near $2,530, down about 2.5% today.

European markets on Tuesday remain on an upbeat note, following yesterday’s positive performance for bourses across Europe. On Monday, the pan-continental Stoxx 600 Europe advanced 2.71 points, or 0.59%, to an all-time closing record of 464.45.

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