Thursday, October 29

U.S. stock futures see volatile moves following sell-off on Wall Street

Stock futures were flat early Thursday after a volatile overnight session with wild swings in and out of negative territory. The pause came in the wake of Wednesday’s heavy losses that saw the S&P 500 tumble more than 2%.

Futures contracts tied to the Dow Jones Industrial Average suggested a nearly flat open. S&P 500 futures and Nasdaq 100 futures were also little changed.

The moves came in an uneven session. Earlier, futures opened Wednesday evening in the green, but comments from President Donald Trump that he would not commit to a peaceful transfer of power should he lose the election appeared to hit sentiment.

Stocks continued their September swoon during regular trading hours on Wednesday, with all of the major averages registering steep losses. The Dow Jones Industrial Average closed 525.05 points, or 1.9%, lower, reversing a 176-point gain from earlier in the session. The S&P 500 declined 2.4%, while the Nasdaq Composite shed 3%.

“There wasn’t one specific reason to explain the selling, and in many ways the slump was a continuation of price action that’s been underway since the start of the month,” said Adam Crisafulli of Vital Knowledge. He noted that the tech trade, which cracked earlier in September, has yet to recover. “Psychology around the group shifted and it’s no longer the stalwart source of support it once was. Meanwhile, investors still aren’t comfortable enough with the cyclical/value stocks to even begin to offset the ongoing tech weakness,” he added.

So far in September the S&P 500 has declined 7.5%, while the Dow has shed 5.8%. The Nasdaq Composite has been the relative outperformer, registering a loss of 9.7% as investors rotate out of Big Tech. Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft are all down at least 11% in September.

Looking ahead to Thursday, investors will get a read on the state of the economic recovery when U.S. jobless claims are released at 8:30 a.m. ET. Federal Reserve Chair Jerome Powell and Secretary of the Treasury Steven Mnuchin will also appear before the Senate banking committee.

The testimony comes as Washington struggles to move forward with additional stimulus measures. On Wednesday Chair Powell reiterated that further fiscal stimulus is needed if the U.S. economic recovery is to continue.

“Today’s [Wednesday’s] stock market action is a clear signal that investors are demanding further stimulus, either fiscal or monetary,” said Andrew Smith, chief investment strategist at Delos Capital Advisors. “While most investors are pinning the recent bout of volatility on seasonality and political uncertainty, we have entered a period where a liquidity pocket is present, which has caused the US Dollar to rally, thus hurting risk assets.”

Credit: CNBC

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