Monday August 30th

30-08-2021

Stock futures are little changed to start the week with the S&P 500 set to add to its record

U.S. stock index futures were quiet on Monday morning as investors readied for the final trading days of August. Dow Jones Industrial average futures rose 14 points, or less than 0.1%. S&P 500 futures gained 0.1% and Nasdaq 100 futures traded 0.1% higher. Monday and Tuesday mark the last two trading days of August. Thus far, the S&P 500 is up 2.6% in August. The Dow Jones Industrial Average and the Nasdaq Composite rose 1.5% and 3.1% this month, respectively. Key technology shares were higher in premarket trading. Chipmakers AMD and Nvidia moved higher, while Microsoft also rose. Shares of Affirm Holdings were up 40% in premarket trading after the buy now, pay later company announced a partnership with Amazon on Friday. Amazon’s stock rose 1%. The S&P 500 and the Nasdaq Composite closed at all-time highs on Friday as investors breathed a sigh of relief after Federal Reserve Chair Jerome Powell signaled bond tapering could start this year, but the central bank is in no rush to hike interest rates.  Powell said inflation is solidly around the central bank’s 2% target rate, one of the goals of the Fed’s dual mandate; however, the Fed chairman also explained why he continues to think the current inflation rise is transitory and will eventually drop to the target level. Based on statements from other Fed officials, a tapering announcement could come as soon as the Fed’s Sept. 21-22 meeting. Powell said the central bank has “much ground to cover” to reach its other goal of maximum employment. “With record GDP and earnings growth, rising inflation and the rates of infection from the Delta variant peaking, the Fed will feel more pressure to remove what is essentially emergency monetary accommodation,” wrote Morgan Stanley’s Mike Wilson, who sees a 10% correction soon in the market. “We expect a more formal signal from the Fed at the September FOMC meeting, and the markets are likely to anticipate it. That means higher interest rates and lower equity valuations.” Stocks could stay largely range-bound until the release of August’s jobs report on Friday. Economists polled by Dow Jones expect 750,000 jobs were created in August and the unemployment rate fell to 5.2%. Friday’s gains added to a strong week for the major averages. The Dow finished up 0.9%, while the S&P 500 added 1.5% and the Nasdaq Composite gained 2.8% last week. With the Fed’s Jackson Hole meeting in the rearview, investors are now focused on the direction of stocks for the final months of the year. The S&P 500 is up more than 20% in 2021 but the market is also absorbing peak policy stimulus, peak earnings acceleration and peak reopening momentum. Oil futures were lower and gasoline futures were higher slightly in a minimal reaction to Hurricane Ida making landfall over the weekend. Cloudera and Zoom Video report earnings after the bell on Monday. Shares in Asia-Pacific mostly rose on Monday trade, with Australian stocks recovering from an earlier slip as Covid cases in the country spike. In Japan, the Nikkei 225 advanced 0.54% to close at 27,789.29 while the Topix index gained 1.11% to 1,950.14. South Korea’s Kospi ended the trading day up 0.33% at 3,144.19. Mainland Chinese stocks were mixed on the day as the Shanghai composite rose 0.17% to 3,528.15, while the Shenzhen component dipped fractionally to 14,423.37. Hong Kong’s Hang Seng index closed 0.52% higher at 25,539.54. Oil prices dropped from a four-week high on Monday as Hurricane Ida weakened after forcing precautionary shutdowns of U.S. Gulf oil production, and attention turned to an OPEC meeting on Wednesday to discuss a further output boost. Within 12 hours of coming ashore, the storm had weakened into a Category 1 hurricane. Nearly all offshore Gulf oil production, or 1.74 million barrels per day, was suspended in advance of the storm. Brent crude was down 21 cents or 0.3% at $72.49 by 1020 GMT, having reached $73.69 earlier, the highest since Aug. 2. U.S. crude fell 50 cents or 0.7% to $68.24, having earlier touched $69.64, the highest since Aug. 6. Gold steadied near a four-week high on Monday, consolidating gains after the U.S. Federal Reserve chief Jerome Powell signaled interest rates will remain low for the foreseeable future. While some investors view gold as a hedge against the higher inflation that could follow stimulus measures, lower interest rates also decrease the opportunity cost of holding non-yielding bullion. Spot gold was steady at $1,816.51 per ounce by 7:29 a.m. ET after earlier hitting its highest since Aug. 4 at $1,822.92. U.S. gold futures edged 0.1% lower to $1,818.10.