Friday October 1st

1-10-2021

Dow futures rebound 100 points following rough September

U.S. stock index futures pointed to a slight rise at the open for the market to start October after the S&P 500 notched its worst month since March 2020. S&P 500 futures and Nasdaq 100 futures rose by 0.3% and 0.1%, respectively. Futures on the Dow Jones Industrial Average added 108 points, or about 0.3%. Futures came off their worst levels amid some good news from Merck and a decline in bond yields. Shares of Dow member Merck jumped 8% after the drug maker and Ridgeback Biotherapeutics said their oral antiviral treatment for Covid-19 reduced the risk of hospitalization or death by 50% for patients with mild or moderate cases. The companies plan to seek emergency authorization for the treatment. The 10-year Treasury yield fell back below 1.50% in early trading. Futures on the tech-heavy Nasdaq went into the green as yields fell. A jump in rates to end September knocked tech stocks. Shares of Royal Caribbean and Las Vegas Sands added more than 1% in premarket trading. Southwest Airlines led a gain in airline stocks after JPMorgan upgraded the stock and said most of the group was worth buying for a trade. Earlier in the overnight session, Dow futures had dropped around 300 points. The market just capped a tumultuous September as inflation fears, slowing growth and rising rates kept investors on edge. The S&P 500 finished the month down 4.8%, breaking a seven-month winning streak. The Dow and the Nasdaq Composite fell 4.3% and 5.3%, respectively, suffering their worst months of the year. “A combination of slowing growth, less accommodative monetary policy, China headwinds, fading fiscal stimulus, and nagging supply chain bottlenecks all conspired to weigh on investor sentiment as we head into fall and 4Q21,” Chris Hussey, a managing director at Goldman Sachs, said in a note. Ten of the 11 S&P 500 sectors suffered losses in September, led to the downside by a 7.4% monthly drop in materials stocks. Energy is the best performer of the month, gaining more than 9%. The S&P is now 5.2% below its all-time high reached in early September, the first 5% pullback of 2021. The broad equity benchmark is still up nearly 15% on the year however. On the data front, personal income rose 0.2% in August, in line with expectations. The price index for core personal consumption expenditures was up 3.6% year over year, slightly ahead of the estimate of 3.5% from economists surveyed by Dow Jones. “As we wrap up the third quarter and look ahead, investors will likely need to remain nimble as the economic recovery continues in a zig zag,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial. While October is known for notable market crashes, it typically is the start of a better seasonal period for stocks. The S&P 500 averages a 0.8% gain in October, according to the Stock Trader’s Almanac. Stocks average a 1.6% increase and 1.5% rise in November and December, respectively, according to the almanac. Congress was poised to prevent a government shutdown Thursday. The Senate and House both passed a short-term appropriations bill that would keep the government running through Dec. 3 and sent it to President Joe Biden to sign. Shares in Asia-Pacific slipped in Friday trade, with Japanese markets among the region’s biggest losers. In Friday afternoon trade, the Nikkei 225 fell 2.31% to close at 28,771.07 while the Topix index shed 2.16% to finish the trading day at 1,986.31. Elsewhere Taiwan’s Taiex plunged 2.15% on the day to 16,570.89. South Korea’s Kospi dipped 1.62% to close at 3,019.18. In Southeast Asia, the Straits Times index in Singapore declined about 1%, as of 3:08 p.m. local time. Markets in Hong Kong were closed for a holiday on Friday, while those in mainland China are closed for the Golden Week holiday from Friday till October 7. Oil prices dropped on Friday on the prospect that the OPEC+ supplier alliance might step up a planned increase in output to ease supply concerns, with soaring gas prices spurring power producers to switch from gas to oil. U.S. West Texas Intermediate (WTI) crude futures slipped 65 cents to $74.38 a barrel, though the contract remained on track to post its sixth consecutive week of gains. Brent crude futures fell 48 cents, or 0.61%, to $77.80 a barrel, but was still heading for a small rise on the week, marking a fourth straight week of gains. Gold eased on Friday as the dollar firmed on bets for interest rate increases but bullion still held above the pivotal $1,750 technical support level en route to a small weekly gain as worries about rising inflation and growth hurt risk sentiment. Spot gold fell 0.2% to $1,753.67 per ounce. U.S. gold futures eased 0.2% to $1,754.30. The dollar held close to its highest level of the year, making gold more expensive in other currencies.