Wall Street Stocks Stabilize, Futures Slightly Lower

20 Aug 2021 · 3rd Party Analysis

Wall Street Stocks Stabilize, Futures Slightly Lower

WRITTEN BY ThorFX

In Summary

  • Stock jitters define Thursday trading as investors weigh the latest update from the Fed
  • Futures on Friday are pressured amid increased uncertainty in the short-term

The $51tn US stock market endured a wobbly trading session on Thursday. After investors had largely digested the news that the Federal Reserve is planning to scale back its ample monetary stimulus, stocks reversed from losses and managed to close mostly higher.

On Thursday, the S&P500 and the Nasdaq Composite were lifted above the flat line by a wafer-thin margin, while the Dow Jones Industrial Average dipped in slightly negative territory. A day earlier, the key event that roiled financial markets was the release of the Fed’s minutes from its last meeting.

The minutes indicated a majority of policymakers were in agreement to begin easing the US central bank’s $120bn monthly monetary support. The Fed’s asset purchase program has underpinned the strong performance in stocks for 17 months, since the depths of the coronavirus-induced market meltdown.

As the economic situation is improving at a rapid pace, most of the 18 members of the Federal Open Market Committee are planning to reduce their monthly cash injections. In signs of sustained economic healing, first-time applications for unemployment benefits fell by 29,000 to 348,000 in the week ended Aug. 14. In addition, the four-week moving average also registered a decline to 377,750 last week, the US Labor Department said.

European Markets Tumble Across the Board

The fresh figure brought the jobless claims level to a new pandemic low, suggesting the job market remains on an upward trajectory. Weekly jobless claims are now down more than 50% since January and have fallen for a fourth straight week. While the Delta strain is surging across the US, some economists say a dynamic has formed between Covid-19 and business activity.

As market participants in the US are preparing to enter the last trading day of the week, stock futures hovered in negative territory. Following the choppy trading session yesterday, futures contracts tied to the Dow Jones Industrial Average are down by about 200 points.

S&P500 futures indicate a lower open by about 0.5% after the broad-based index eked out a winning day. Nasdaq futures are trading to the downside by about 0.40% ahead of the opening bell in New York.

In Europe today, markets are tumbling across the board after investors sustained significant losses during yesterday’s trading activity. Friday’s market moves across European bourses are pinned about 0.50% below the flat line with the Stoxx Europe 600 lower by 0.45%.

The pan-continental Stoxx 600 slipped 1.5% on Thursday with almost all sectors in the red. The travel and leisure index declined 2.5% amid increased uncertainty surrounding the end of the summer season. Utilities, generally regarded as a safe haven in times of economic jitters, were the only sector in positive territory.

Digital assets, meanwhile, are steady to the upside in the early hours of Friday’s trading. Bitcoin has been grinding higher for the past two days, gaining nearly 8%. A weak start of the week erased about 5% from

bitcoin’s price. Market participants, however, have supported the leading digital currency and it is now on track to finish the week higher by less than 1%. Bitcoin is currently gravitating toward $47,000 per coin.

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