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Stock futures pause for breath with S&P 500, Nasdaq at records

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U.S. stock-index futures were in a holding pattern near record highs on Tuesday as investors returned from a three-day weekend.

Investors were also keeping tabs on oil prices, which surged to six-year highs after talks by the Organization of the Petroleum Exporting Countries and its allies failed to come to an agreement on a proposal to boost output in coming months.

What are major benchmarks doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.06%

    were off 20 points, or 0.1%, at 34,657.

  • S&P 500 futures
    ES00,
    -0.02%

    edged down 0.55 point to 4,342.25.

  • Nasdaq-100 futures
    NQ00,
    +0.20%

    rose 28.50 points, or 0.2%, to 14,742.25.

U.S. markets were closed Monday in observance of Independence Day, which fell on Sunday. On Friday, the S&P 500
SPX,
+0.75%

closed at its seventh consecutive record — its longest such streak since 1997 — and the Nasdaq Composite
COMP,
+0.81%

also Dow
DJIA,
+0.44%

also finished at all-time highs.

What’s driving the market?

Stocks have slowly pushed further into record territory in recent weeks as investors focused on a strengthening economy as fears of inflation appeared to ease.

“Sentiment towards risk remains positive as we enter the second half of the year after a positive end to Q2. The S&P 500 and other U.S. indices hit repeated new all-time highs, with investors happy to buy every dip in the markets,” said Fawad Razaqzada, analyst at ThinkMarkets, in a note.

Need to Know: Here’s what could turn a ‘breather’ for stocks into a bigger correction

Accelerating COVID-19 vaccinations around the world and central bank stimulus are seen contributing to strong economic growth, while fears that inflation will hit uncomfortably high levels have been kept at bay as the Federal Reserve and other central banks insist that increased price pressures are a temporary phenomenon resulting from supply-chain bottlenecks, he said.

Read: What to expect if ‘peak everything’ already has happened and markets feel the force of gravity again

Also see: Is the market pricing in ‘peak growth’? These charts suggest as much, says a leading strategist

Inflation concerns may be back in focus though, analysts said, as oil prices surged following the breakdown of OPEC+ talks aimed at further lifting output curbs beginning in August. Talks were called off Monday after the United Arab Emirates stuck to its call to increase the baseline used to determine its output level and objected to a plan to extend the framework for the existing program of supply cuts from April 2022 through the end of next year.

The jump in oil prices will put energy shares in focus. The Energy Select SPDR ETF
XLE,
-0.22%

was up 0.7% in premarket trade, while the SPDR S&P Oil & Gas Exploration & Production ETF
XOP,
-1.81%

rose more than 1%.

The final reading of the IHS Market services purchasing managers index for June is due at 9:45 a.m. Eastern. The Institute for Supply Management’s services index, due at 10 a.m., is expected to fall to 63.3% from 64%. A reading of more than 50% indicates expansion in activity.

Which companies are in focus?
How are other markets trading?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.414%

    fell 2.5 basis points to 1.41%. Yields and debt prices move in opposite directions.

  • The ICE U.S. Dollar Index
    DXY,
    +0.14%
    ,
    a measure of the currency against a basket of six major rivals, rose 0.1%.

  • The U.S. oil benchmark
    CL00,
    +0.75%

    remained up 0.9% at $75.82 a barrel on the New York Mercantile Exchange. Gold futures
    GC00,
    +1.54%

    rose 1.7% to $1,813.70 an ounce.

  • European equities were mixed, with London’s FTSE 100
    UKX,
    -0.17%

    off 0.1%, while the Stoxx Europe 600 index
    SXXP,
    +0.19%

    rose 0.2%.

  • In Asia, the Shanghai Composite
    SHCOMP,
    -0.11%

    edged down 0.1%, while Hong Kong’s Hang Seng Index
    HSI,
    -0.25%

    fell 0.3% and Japan’s Nikkei 225
    NIK,
    +0.16%

    rose 0.2%.

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