Wednesday September 9th

9-09-2020

Stock futures bounce after the Nasdaq posts 10% correction in 3 days, Tesla and Apple rebound

U.S. stock index futures rebounded on Wednesday as investors snapped up technology shares that were pummeled in the previous three sessions. Futures for the tech-heavy Nasdaq 100, the epicenter of the selling the last three days, gained 1.3%. S&P 500 futures rose 0.5%. Dow futures indicated an opening gain of about 100 points. The Nasdaq Composite was down more than 10% in three days from a record high, officially entering correction territory. The S&P 500′s three-day loss was its worst since June. Shares of Tesla, which had their single worst day ever on Tuesday dropping 21%, rose 4.8% in premarket trading Wednesday. Apple, which lost more than 6% in the previous session, rose by 2.4% in premarket trading. Those two stocks, along with Microsoft, Amazon, Alphabet and Facebook, lost $1 trillion in market value the last three days. All six were rebounding in premarket trading Wednesday. Investors including CNBC’s Jim Cramer believed it could be time to start cautiously nibbling at some stocks. The moves in the futures market came as investors shrugged off a setback with a coronavirus vaccine and disappointing earnings news. AstraZeneca shares fell in extended trading after the company said a late-stage trial of its Covid-19 vaccine candidate has been put on hold due to a suspected serious adverse reaction in a participant in the U.K. Shares of athletic retailer Lululemon and messaging platform Slack fell in after-hours trading on Tuesday, despite both companies reporting better-than-expected earnings. The sell-off in technology shares worsened on Tuesday as investors rotated out of companies that led the market’s historic comeback from the coronavirus recession. The tech-heavy Nasdaq Composite underperformed once again on Tuesday — falling more than 4% — after suffering its worst week since March. The index is still up more than 63% from its 52-week low in March. In addition to the high flying FAANG names and stay-at-home stocks, chip stocks were among the biggest losers as tensions between the U.S. and China continued to escalate. Meanwhile, a 21% drop in Tesla — its largest single-day stock drop — dragged down the Nasdaq. Tesla was excluded from joining the S&P 500 on Friday. The Dow Jones Industrial Average cratered more than 600 points, weighed on by a near-6% drop in Boeing. The S&P dipped 2.7%, for its third straight negative day for the first time since June 11. Many on Wall Street believe the technology weakness derived from worries that the massive tech run-up pushed valuations to unsustainable levels. Even with last week’s pullback, the Nasdaq is up more than 60% from its March bottom. “Some are suggesting this is the start of another dramatic sell-off, similar to the spring of 2000 when the ‘tech bubble’ burst. I highly doubt that,” Kristina Hooper, Invesco Chief Global Market Strategist, said in an email to CNBC. “I think of this rout not so much as a correction, but as a digestion given that the Nasdaq Composite rose more than 60% from its March bottom in the course of less than six months. All In all, I think this is a healthy period of consolidation after a dramatic run-up.” The technology rout gave life to some of the cyclical stocks, those most sensitive to the recovery of the economy. Airlines, cruise lines and some retailers outperformed on Tuesday. Aviva Investor’s Susan Schmidt told CNBC the day following a market holiday is often met with investors focusing intently on the markets, which increases volatility. The Cboe Volatility index, an investor fear gauge, spiked above 31 on Tuesday. The Labor Department’s Job Openings Labor Turnover Survey for July will be released at 10 a.m. ET on Wednesday and the report —although somewhat dated — should give investors some insight into the labor market. Analysts polled by Dow Jones expect hiring rose 6.0 million in July, up from 5.9 million in June. Markets in Asia-Pacific declined Wednesday, with technology shares regionally mostly seeing losses. Mainland Chinese stocks dropped on the day, with the Shanghai composite slipping 1.86% to about 3,254.63 while the Shenzhen component fell 3.247% to 12,861.75. Hong Kong’s Hang Seng index shed 0.63% to close at 24,468.93. In Japan, the Nikkei 225 declined 1.04% to finish its trading day at 23,032.54 while the Topix index fell 0.96% to close at 1,605.40. South Korea’s Kospi also slipped 1.09% to close at 2,375.81. Oil futures clawed back some of the losses they sustained in the previous session, but a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand. Brent crude was up 44 cents, or 1.1%, at $40.22 a barrel after dropping more than 5% on Tuesday to fall below $40 a barrel for the first time since June. U.S. crude was up 50 cents, or 1.4%, at $37.26 a barrel, having fallen nearly 8% in the previous session. Both major oil benchmarks are trading close to three-month lows. Gold prices slipped on Wednesday as the U.S. dollar rose to multi-week highs ahead of monetary policy strategies from major central banks in North America and Europe. Spot gold was down 0.3% to $1,925.20 per ounce by 0239 GMT. U.S. gold futures fell 0.4% to $1,935.20.