U.S. stock futures fell Monday and U.S. government bond sales expanded into its sixth week after progress toward a new fiscal stimulus bill clarifying economic prospects and reducing demand for technology stock.
S&P 500 futures fell 0.6%, suggesting the broad market may decline after the opening bell. The benchmark ended Friday up 0.8% for the week, following a volatile week in which investors turned out of big tech stocks. Nasdaq-100 futures fell 1.5% at the start of the new week, indicating that tech stocks were extending losses.
In the bond market, the yield on the US 10-year benchmark. Treasurys ticked up to 1.592% when investors moved money out of assets that were considered the safest in the world. Yields rise when bond prices fall. It finished Friday at 1.551%, the highest level since February 2020.
President Biden’s $ 1.9 trillion Covid-19 relief plan was approved in the Senate over the weekend, and he has a vote in the House as early as Tuesday. Further fiscal spending is expected to strengthen the pace of economic recovery and rising inflation. As the outlook clarifies, money managers are moving out of government bonds and technology stocks, and into sectors such as banks and energy that are likely to bounce back with the economy.
“Incentive checks into people’s bank accounts will be a major stimulus for growth, as the U.S. consumer accounts for such a large portion of U.S. growth,” said Shaniel Ramjee, diversified asset manager at Pictet Asset Management. “The fundamental strength of the US economy, the growing expectation that the stimulus will be fully exceeded, as well as rising oil inflation expectations: are all likely to continue to pushing bond yields higher. ”
Technical stocks have been in decline for the past few weeks as vaccination programs evolve and economic data indicates the recovery is underway. The Nasdaq Index declined over 2% last week, losing ground for the third week in a row. That’s because investors are betting that the largest media, communications and online shopping companies will see a slower growth rate as pandemic locks end.
Traders were working on the floor of the New York Stock Exchange on Friday.
Photo:
Nicole Pereira / Associated Press
Ahead of the open market, major tech stocks including Apple, Microsoft, Amazon.com, Alphabet and Facebook fell in early trading. Apple, the largest S&P 500 company by market value, has fallen over 8% this year. Shares in Tesla, the electric vehicle maker that was also popular among individual investors fell last year, by more than 3% premarket. It has lost more than 15% so far in 2021.
“A key element of the market is what’s happening in the product market: The U.S. tech side is suffering from the current normalization in capital spending,” said Samy Chaar, chief economist at Lombard Odier. “The current market acknowledges that we are improving. Streams rebalance to better reflect this cyclical recovery. “
Among other stocks moving in pre-sale trading, General Electric rose 3.2%. The Wall Street Journal reported that the entrepreneurial company was close to a $ 30 billion contract to merge its aircraft rental business with AerCap Ireland.
Some tech stocks fell, including Tesla, which slipped 4%, and the Square fell nearly 3%.
Abroad, Stoxx Europe 600 pan-continental prices rose 0.6%, led by banking stocks. The European stock market is benefiting from investors turning into value stocks, analysts said.
Among individual stocks, ABN Amro rose over 7%, Banco de Sabadell rose more than 5% and Deutsche Bank gained more than 4%.
In Asia, most criteria fell before the end of trade. The Shanghai Composite fell 2.3% and the Hong Kong Hang Seng Index fell 1.9% as investors rallied with signs that Chinese policymakers will take more action to recoup and prevent debt. asset bubbles.
Write to Anna Hirtenstein at [email protected]
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