Monday June 7th

7-06-2021

S&P 500 futures fall slightly to start the week as the benchmark sits inches from a record

U.S. stock index futures were flat to slightly lower Monday as the S&P 500 attempts to make a run at a record high this week amid optimism about the economy’s ongoing reopening this summer. S&P 500 futures were little changed. Dow Jones Industrial Average futures rose 70 points. Nasdaq-100 futures were also flat. The S&P 500 sits just 0.2% from its intraday record high earlier in May. The benchmark advanced 0.6% last week to bring its 2021 gains to more than 12%. The Dow and Nasdaq also posted gains last week. Tech stocks were weak in premarket trading, weighing on sentiment a bit. Shares of Zoom and Tesla each fell about 1%. Visa shares were higher in premarket trading, gaining 1% following an upgrade by Piper Sandler. “Stocks have climbed back toward record-high territory as the pace of the economic recovery appears to be well-balanced,” said Craig Johnson, chief market technician at Piper Sandler. “Signs of rising inflation have mostly been offset by rising subscriptions to the Fed’s ‘transitory’ outlook.” Friday’s jobs report showed the unemployment rate dropping to 5.8% from 6.1% and that 559,000 jobs were added in May. The report was seen as strong enough to keep investors’ confidence in the economy, but light enough to keep the Federal Reserve from rushing to change its easy money policies. Investors are focused on inflation data in the week ahead, with May’s Consumer Price Index (CPI) scheduled to be released Thursday. In April the CPI rose 4.2% from the previous year, the fastest increase since 2008. If prices continue to rise it could cause the Federal Reserve to step back from its easy policies. Over the weekend the G-7 nations reached an agreement on global tax reform, calling for the world’s largest corporations to pay at least a 15% tax on their earnings. That’s lower than the Biden administration’s initial suggestion of a minimum 21% tax rate, which didn’t garner much enthusiasm in other countries. Major companies including Facebook and Google have responded favorably to the agreement. Meme stocks will be back in the spotlight again this week. Most of these speculative stocks, including GameStop, AMC and BlackBerry, ended the week in the red despite massive gains after a volatile trading week. Shares in Asia-Pacific were mixed on Monday as investors reacted to Chinese trade data for May. Mainland Chinese stocks closed mixed, with the Shanghai composite rising 0.21% to 3,599.54 while the Shenzhen component declined fractionally to 14,862.60. Hong Kong’s Hang Seng index fell 0.55%, as of its final hour of trading. Meanwhile, the Nikkei 225 in Japan gained 0.27% to close at 29,019.24 and the Topix index rose nearly 0.1% to end the trading day at 1,960.85. South Korea’s Kospi closed 0.37% higher at 3,252.12. Oil pulled back after hitting fresh multi-year highs on Monday, as investors awaited the outcome of this week’s talks between Iran and world powers over a nuclear deal that is expected to boost crude supplies. Brent crude futures for August fell 37 cents, or 0.5%, to $71.53 a barrel, after earlier hitting $72.27, their highest since May 2019. U.S. West Texas Intermediate crude for July touched $70 for the first time since October 2018 but retreated to $69.32 a barrel, down 30 cents, or 0.4%. Gold retreated on Monday as the U.S. dollar firmed slightly, with investors’ focus switching to U.S. inflation readings later this week that might give some clue to how long the Federal Reserve will hold off from tapering monetary support. The dollar index strengthened 0.1%, making gold more expensive for holders of other currencies. Spot gold was down 0.3% to $1,883.50 per ounce by 0929 GMT. U.S. gold futures eased 0.3% to $1,885.40.