Monday February 5th

5-02-2018

Dow futures slide 153 points as stocks resume Friday's ugly sell-off

U.S. stock index futures fell sharply on Monday morning as Wall Street added to the large losses suffered last week. Dow Jones industrial average futures fell 153 points after briefly falling more than 300 points, while S&P 500 and Nasdaq 100 futures dropped 9 points and 32.5 points, respectively. The major U.S. stock indexes capped off their worst weekly performance in two years on Friday following a steep sell-off. The Dow and S&P 500 pulled back 4.1 percent and 3.9 percent, respectively, last week. The Nasdaq lost 3.53 percent. European stocks also fell on Monday. The German Dax traded 0.8 percent lower, while the French CAC 40 and the FTSE 100 declined more than 1 percent. The Dow fell 665.75 points on Friday — or 2.5 percent — notching its biggest one-day sell-off since June 2016. The S&P 500 had its worst one-day performance since Sept. 2016 and the Nasdaq posted its worst session since August 2017. The S&P 500 also snapped its longest streak without a pullback of at least 3 percent Friday. The broad index went 448 days without a decline of that magnitude, according to Bespoke Investment Group. Stocks began the new year ripping higher. The Dow and S&P 500 had their best monthly gains since March 2016 last month. The Nasdaq posted its biggest one-month gain since October 2015 in January. The major indexes had also notched record highs. Equities benefited from strong economic data and solid corporate earnings growth at the start of the year. But increasing inflation concerns have sent interest rates higher recently, rattling Wall Street. This stocks sell-off "reflects 'growing pains' as the markets adapt to above-trend growth and a normalization of inflation that have led to a back-up in rates," Jason Draho, head of tactical asset allocation for the Americas at UBS, said in a note Friday. "We continue to recommend an overweight to equities globally versus US government bonds in our tactical asset allocation," he said. "However, markets are likely to remain choppy as they adapt to this new growth and interest rate environment." The benchmark 10-year yield rose to 2.88 percent overnight before holding around 2.82 percent Monday. The CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, hit its highest level since November 2016 before trading at 18.39. Asia markets fell across the board on Monday, following a sharp decline in U.S. stocks on Friday on a stronger-than-expected jobs report that sent interest rates higher. In Japan, the Nikkei 225 fell 592.45 points, or 2.55 percent, to 22,682.08, while the Topix index declined 40.46 points, or 2.17 percent, to 1,823.74. South Korea's Kospi index fell 1.33 percent in late-afternoon trade. Chinese mainland markets traded mixed, with the Shanghai composite retracing early losses to rise 0.73 percent in afternoon trade. The Shenzhen composite fell 0.84 percent. In Hong Kong, the Hang Seng index declined 1.09 percent. Oil fell for a second day on Monday, with Brent crude nearing its lowest level in a month, as rising U.S. output and a weaker physical market added to the pressure from a widespread decline across equities and commodities. Friday's U.S. jobs report that showed the fastest wage growth in nearly nine years exacerbated a broader market sell-off that was already under way as Wall Street stocks backed off record highs, and a rising dollar dented commodities. Brent crude futures were down 74 cents, or 1.1 percent, at $67.84 a barrel by 8:43 a.m. ET (1343 GMT), after touching its lowest level since Jan. 8. U.S. West Texas Intermediate (WTI) crude fell 37 cents to $65.08. The contract touched a roughly three-year intraday high of $66.66 on Jan. 25. Gold edged up on Monday, clawing back some lost ground after posting its biggest one-day loss in two months in the previous session as a softer tone to the dollar took some pressure off the metal. Spot gold was at $1,336.08 an ounce at 8:10 a.m. EST, up 0.24 percent but well below late-January's 17-month high of $1,366.07. U.S. gold futures for April delivery rose 0.13 percent at $1,338.90.