S&P futures barely modified a day after a file shut as merchants await steering from the Fed
US stock index futures traded mixed on the Dow and S&P early Tuesday one day after the closing price.
Futures contracts linked to the Dow Jones Industrial Average implied an opening loss of around 40 points. S&P 500 futures traded near flat, while Nasdaq 100 futures traded a little higher.
Despite recent highs for major averages, there are growing concerns among investors that interest rates may continue to rise and wipe out the comeback for stocks. Traders will receive more guidance on interest rates and inflation from the Federal Reserve on Wednesday. The central bank begins its two-day meeting on Tuesday, followed by a statement and briefing from Chairman Jerome Powell the following day.
“The markets will be in tune with every word,” said Rick Rieder, BlackRock’s CIO for global fixed income. “If he doesn’t say anything, it will move the markets. If he says a lot, it will move the markets.”
The 10-year government bond yield was 1.6% early Tuesday, which little changed. The rate hit its highest level in more than a year above 1.63% on Friday. The recent surge in bond yields has resulted in a rotation in growth stocks as companies’ future cash flows appear less attractive compared to other assets.
“The distribution of COVID-19 vaccines brings us closer to a fully reopened economy and is probably the single most important factor in assessing the economic growth outlook for 2021,” said LPL Financial strategists. “We expect interest rates to fall as a threat to the markets,” added the company.
During Monday’s regular trading hours, the Dow jumped 174 points, making it the 21st record intraday high of the year and the 14th record closing high of 2021. It was also the seventh consecutive positive session of the 30-stock average – the longest daily winning streak since August.
The S&P 500 gained 0.64% for the fifth time in a row. The benchmark index reached its 16th intraday high of the year and its 13th record high. The Nasdaq Composite was the relative outperformer on Monday, up 1.05% and recouping some of its recent losses.
A mix of big tech companies and economic reopening games like airlines drove higher averages on Monday as the coronavirus vaccine rollout continues.
“After an approximately 14-year cycle of outperformance, the dominance of growth relative to value peaked in autumn 2020,” said Keith Lerner, Chief Market Strategist at Truist. “We are still seeing higher value relative to growth over the next 12 months as value underperforms dramatically over the long term and the US economy is at its peak of best growth in more than 35 years.”
On Tuesday, Lennar and CrowdStrike will be among the companies to show profits. February retail sales data is set to be released in addition to home builder sentiment data from the National Association of Home Builders.