Wall Street Stock Futures Muted, Dow to Extend a Two-day Drop

18 Jun 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • US equity futures hover near unchanged levels, Dow Jones poised to open lower
  • Nasdaq futures point higher as the tech index may avoid taking a hit by the Fed statement

The Dow Jones Industrial Average is looking to build on its two-day losing streak according to futures trading in pre-market hours ahead of the opening bell in New York on Friday. Futures in the Dow are trading negative, while S&P futures are floating near the flatline. Nasdaq futures are moderately higher, up by about 0.15%.

Traders and investors today will aim to pare some of the losses over the past two days in the wake of the Federal Reserve’s policy shift. Market participants were unable, despite strong efforts, to offset the losses yesterday and both the Dow and the S&P500 continued their descent that kicked off on Wednesday.

The Dow Jones Industrial Average closed Thursday’s session lower by 0.62%, or 210.22 points, at 33,823.45. The S&P500 ended mildly negative by 0.04%, or 1.84 points, to 4,221.86. The Nasdaq Composite snatched a winning day and added 0.87%, or 121.67 points, to close at 14,161.35.

The blue-chip 30-stock index is poised to end the week in the red. Monday to date, the benchmark index is lower by 1.9%. The broad-based S&P500 is also negative, down by 0.6%. The Nasdaq Composite has managed to pull ahead by 0.65% on the week, avoiding the blow by the Federal Reserve statement.

The Fed Meeting Effect Lingers On

The highly anticipated Fed meeting still echoes around the financial markets on Friday. Stocks, commodities, currencies and bonds, all were jolted by the central bank’s announcement to move the interest rate hike forward by one year. The Fed also raised its inflation expectation for 2021 to 3.4%, materializing investors’ fears of a market environment threatened by higher inflation pressures.

On Thursday, the Labor Department reported jobless claims increased by 37,000 to a total of 412,000 in the week ended June 12. The data paused the previous downward trend as worker filings for unemployment benefits rose for the first time since April. Nevertheless, the figures remained near the pandemic low. Despite the increase, the four-week moving average still managed to slide lower and reach a new pandemic bottom of 395,000, the lowest since March 2020.

In Europe, stocks are trading mixed to negative on Friday. UK’s FTSE100 is negative by about 0.40%, while the German DAX is lower by roughly 0.30%. France’s CAC40 is fairly muted. The pan-European Stoxx 600 hovered near unchanged levels in early trading but later dipped in the red and declined by around 0.15%.

Gold is pushing higher on Friday, after experiencing its largest drop in over 10 months during the past two days. The precious metal declined nearly 5% to $1,777 a troy ounce, its lowest since early May. On the other hand, the dollar rose against its peers in the currency market.

On the cryptocurrency front, bitcoin’s buying momentum faded as the week unfolded. The digital currency is now trading under $38,000 per coin, negative by 3.9% on the week. Over the past two days, bitcoin declined 6.39%.

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