U.S. Stock Futures Wobble After Turbulent Session
22 September 2020 - 12:18PM
Dow Jones News
By Joe Wallace
U.S. stock futures wobbled Tuesday, signaling that stocks may
steady after a bout of volatility that has eroded investors'
confidence in the market's monthslong rebound.
Futures tied to the S&P 500 edged up 0.2% while contracts
tied to the technology-heavy Nasdaq gained 0.8%. The market
retreated sharply Monday, pushing the S&P 500 to a
fourth-straight day of losses, the longest losing streak for the
broad gauge since late February.
Stocks have gyrated in recent trading sessions, after marching
higher for much of the summer. The turbulence entered a new phase
Monday, when shares in sectors that are highly sensitive to
economic growth, such as banks, materials and industrials, endured
the biggest declines. Technology stocks, whose swings had weighed
on markets in recent weeks, advanced.
Investors say they are contending with a clutch of risks,
including the dwindling chances that lawmakers agree on a second
round of economic relief before the November election. Money
managers are also increasingly concerned about the possibility of a
protracted period of uncertainty following the election.
Surging cases in Europe have knocked confidence in the world
economy's recovery from the downturn sparked by coronavirus.
Reported new cases increased sharply in the U.S. Monday, to 52,000.
That was the highest single-day increase since Aug. 14, according
to Johns Hopkins University.
"The volatility will continue for a little while longer," said
Andrew Sheets, chief cross-asset strategist at Morgan Stanley.
Ultimately, the turbulence is likely to be a blip in a long-running
bull market, he said. But for now, "investors should keep their
powder dry" and not seek to buy stocks at discounted prices, Mr.
Sheets added.
In prepared remarks published Monday ahead of Federal Reserve
Chairman Jerome Powell's scheduled testimony on Capitol Hill, the
policy maker suggested Congress would need to spend more to shore
up struggling parts of the economy. "The path forward will depend
on keeping the virus under control, and on policy actions taken at
all levels of government," Mr. Powell said.
Mr. Powell is due to testify to the House Financial Services
Committee alongside Treasury Secretary Steven Mnuchin, starting at
10:30 a.m. ET.
Investors are also worried that the rebound in consumer spending
will go into reverse without a new deal among U.S. lawmakers to
provide additional unemployment benefits. Extra benefits approved
by Congress near the start of the pandemic expired at the end of
July. In early August, President Trump issued an executive action
allowing states to tap disaster-relief funds for $300 a week in
enhanced aid.
"It's key to the U.S. economy that the unemployment benefits
continue to be delivered to the consumers, the households," said
Sophie Chardon, cross-asset strategist at Lombard Odier. "Consumer
confidence is still very fragile."
The Swiss private bank is taking a cautious stance, having
dialed back its exposure to stocks and bought cash. "The recovery
is very uneven and incomplete," Ms. Chardon said.
Yields on 10-year Treasury notes were little changed at 0.669%,
from 0.670% Monday, ahead of Mr. Powell's testimony. The WSJ Dollar
Index, which tracks the U.S. currency against a basket of others,
edged down 0.1%, a day after it notched its biggest one-day advance
in over a month.
International stock markets were mixed. The Stoxx Europe 600
gained 0.7%, clawing back some ground after suffering its biggest
fall since mid-June.
Asian markets followed U.S. shares lower. The Shanghai Composite
Index fell 1.3% by the close, while South Korea's Kospi shed
2.4%.
Commodity markets steadied, with U.S. crude futures gaining 1.1%
to $39.97 a barrel and gold futures up 0.1% to $1,912.50 a troy
ounce.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
September 22, 2020 07:03 ET (11:03 GMT)
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