Tuesday August 3rd

3-08-2021

Stock futures rebound after losing day as Dow tries for another run at a record

U.S. stock index futures rebounded on Tuesday a day after worries about slowing economic growth kept investors on edge and knocked stocks lower. Futures on the Dow Jones Industrial Average gained 89 points, or 0.3%. S&P 500 futures added 0.2% and Nasdaq 100 futures gained 0.3%. The blue-chip Dow climbed 250 points to touch an all-time high at one point on Monday, but ended the session nearly 100 points lower. It closed about 1% from a record Monday. The 10-year Treasury yield was stable on Tuesday, easing some of the concerns about slowing economic growth, after falling back to near 5-month lows on Monday. However, oil prices continued to fall. The spread of the delta coronavirus variant continued to keep investors on edge. The seven-day average of daily coronavirus cases in the U.S. reached 72,790 on Friday, surpassing the peak seen last summer when the nation didn’t have an authorized Covid-19 vaccine, according to data compiled by the Centers for Disease Control and Prevention. However, on the positive side the U.S. reached the 70% Covid vaccine milestone, according to the CDC. Stocks that would benefit most from an economic reopening and more widespread vaccination gained in premarket trading Tuesday. Shares of most airlines were higher in premarket trading, along with Carnival Corp. “The delta variant of the virus is now rapidly spreading in the U.S. and a modest pullback in activity can’t be ruled out,” Solita Marcelli, CIO Americas at UBS, said in a note. “But any potential slowdown should be somewhat muted.” Tesla was set for more gains on Tuesday following a 3% pop on Monday. Shares of Simon Property gained in after hours trading Monday after the mall owner said sales bounced back to pre-pandemic levels, up 80% from a year ago. It also reported a relatively high occupancy rate. Concern about slowing economic growth triggered a drop in Treasury yields on Monday. The yield on the benchmark 10-year Treasury note fell as much as 8 basis points to 1.15%. Monday’s slide in bond yields followed data showing the U.S. manufacturing sector expanded at a slower pace than a month ago. The late-day sell-off in economically sensitive stocks like materials and industrials eventually pushed the Dow and the S&P 500 into the red. Investors are closely monitoring progress in Washington as lawmakers move toward a bipartisan infrastructure bill that would devote $550 billion to U.S. infrastructure. Senate Majority Leader Chuck Schumer aims to rush the 2,702-page legislation through the chamber before a planned monthlong recess starting Aug. 9.  Meanwhile, the second-quarter earnings season continues with Under Armour shares rising in premarket trading after the company beat estimates on the top and bottom lines. Shares of Eli Lilly were lower after the drugmaker’s earnings came in lighter than expect. Clorox’s stock was also under pressure after a disappointing report. Through Friday, 88% of S&P 500 companies had reported a positive earnings surprise for the second quarter, which will mark the highest percentage since FactSet began tracking this metric in 2008. “Rising earnings are providing valuation support,” Terry Sandven, U.S. Bank Wealth Management chief equity strategist, said in a note. “Rising revenue and earnings, generally restrained inflation, relatively low interest rates, ongoing monetary and fiscal stimulus policies and COVID-19 medical progress support our outlook for rising U.S. equities in 2021′s second half.” Stocks in Asia-Pacific were mixed on Tuesday, with Hong Kong-listed shares of firms in the Chinese online gaming market plummeting after the activity was described as a type of “opium” by Chinese state media. By the Tuesday market close in Hong Kong, shares of Tencent in in the city plunged  6.11% while Netease and Bilibili dropped 7.77% and 3.44%, respectively. The Hang Seng Tech index declined 1.47% to 6,696.66. Hong Kong’s broader Hang Seng index dipped 0.16% to close at 26,194.82. Mainland Chinese stocks closed lower as the Shanghai composite declined 0.47% to 3,447.99 while the Shenzhen component fell 0.414% to 14,736.92. The Nikkei 225 in Japan slipped 0.5% to close at 27,641.83 while the Topix index shed 0.46% to end the trading day at 1,931.14. Meanwhile, South Korea’s Kospi closed 0.44% higher at 3,237.14. The Taiex in Taiwan also advanced 0.29% to finish the trading day at 17,553.76. Crude oil prices reversed course after an early bounce on Tuesday, as concerns over coronavirus curbs combined with slowing factory activity in key markets weighed on sentiment. Brent crude oil futures shed $1.02, or 1.4%, to trade at $7187 per barrel. U.S. West Texas Intermediate (WTI) crude was down $1.22, or 1.7%, at $70.03 per barrel. Both markets dropped more than 3% on Monday. Gold prices were caught in a tight range on Tuesday as investors held back from making large bets ahead of U.S. jobs data later this week expected to shed more light on labor market health and the Federal Reserve’s tapering timeline. Spot gold slipped 0.2% to $1,810.40 per ounce by 0859 GMT, while U.S. gold futures fell 0.4% to $1,814.10.