Friday September 10th

10-09-2021

S&P futures bounce after four days of losses, Dow futures gain 160 points

U.S. stock index futures pointed to a market rebound on Friday, after the S&P 500 and Dow Jones Industrial average registered a fourth-straight day of losses on Thursday. Futures contracts tied to the Dow rose 168 points, or 0.5%. S&P 500 futures rebounded by 0.4% and Nasdaq 100 futures added 0.4%. For the holiday-shortened week, the Dow is down 1.4% and on pace for its second negative week in a row. The S&P 500 is off by about 0.9% for the week, while the Nasdaq Composite is 0.8% lower. September is historically a weak month for stocks and investors have continued to sell stocks consistently after a weak August jobs report a week ago Friday raised questions about the state of economic recovery amid the Covid resurgence. Several airlines on Thursday lowered forecasts, citing weak travel demand because of the delta variant. The U.S. is averaging the same amount of new Covid cases as levels seen in January. But stocks linked to the economic recovery bounced Friday with airlines and energy stocks higher in premarket trading. Delta Air Lines and American Airlines traded in the green. Cyclical plays like Boeing and FedEx were also higher in premarket trading. Wells Fargo shares jumped 2% after the bank said the CFPB consent order related to its 2016 sales practices has ended, removing an overhang on the stock. President Joe Biden stiffened his stance on getting Americans vaccinated on Thursday, outlining a plan to mandate Covid vaccines for millions. Federal employees will be required to get a Covid vaccine and the president is asking the Labor Department to require employers with more than 100 employees to mandate vaccines or weekly testing. “Ultimately, we see stocks finishing September strongly,” wrote Fundstrat’s Tom Lee in a note to clients late Thursday. “Delta variant organically looks to be slowing...White House plan really brings hammer to containing COVID-19.” Biden’s phone call Friday with Chinese President Xi Jinping, the first time the two world leaders spoke since February, also added to positive market sentiment. The Federal Reserve kicks off a two-day meeting on Sept. 21, and the Street will be watching for an update on the Fed’s bond-buying program. On Thursday the European Central Bank left its monetary policy unchanged, but said that it will slow the pace of its asset-purchase program. Hot inflation is complicating the matter and could lead to a situation where the Fed is taking away easy policy to ease inflation as the economy is slowing, raising fears of stagflation with investors. The August producer prices index released Friday showed wholesale costs for businesses rose 8.3% on an annual basis, its biggest advance on record since at least 2010. The PPI accelerated 0.7% for the month, above the 0.6% Dow Jones estimate. The more important consumer price index for August will be released on Tuesday. “The pace of policy changes will be gradual enough not to derail the economic recovery or the equity rally, while the differences between the more hawkish and more dovish central banks will create opportunities,” said Mark Haefele, UBS Global Wealth Management chief investment officer. “We expect major central banks to remain supportive of growth, keeping rates lower for longer. This is positive for equity markets, particularly cyclical and value areas of the market,” he added. The major averages are still hovering around their all-time highs. The Dow is roughly 2% below its record, while the Nasdaq and S&P are about 1% from theirs. Shares in Asia-Pacific rose on Friday, as investors monitored Hong Kong-listed stocks of firms in regulation-hit sectors such as video games. The broader Hang Seng index in Hong Kong jumped 1.91% on the day to 26,205.91, largely recovering from its more than 2% decline on Thursday. Mainland Chinese stocks closed higher, with the Shanghai composite rising 0.27% to 3,703.14 while the Shenzhen component gained 0.499% to 14,771.87. In Japan, the Nikkei 225 rose 1.25% to close at 30,381.84 while the Topix index advanced 1.29% to finish the trading day at 2,091.65. South Korea’s Kospi edged 0.36% higher, closing at 3,125.76. Oil rose towards $73 a barrel on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as U.S.-China trade hopes gave riskier assets a boost. About three-quarters of the U.S. Gulf’s offshore oil production, or about 1.4 million barrels per day, has remained halted since late August. Figures this week showed U.S. crude inventories fell to the lowest since September 2019. “With the restart in offshore crude production lagging, the odds are that the Ida effect will still be felt in the coming weeks,” said Stephen Brennock of oil broker PVM. Brent crude rose $1.20, or 1.7%, to $72.65 by 0825 GMT. U.S. West Texas Intermediate (WTI) crude was at $69.19, up $1.05 or 1.5%. Gold prices inched higher on Friday as the dollar eased slightly, but uncertainty over the U.S. Federal Reserve’s next moves on unwinding its economic support measures kept bullion in a relatively tight range. Spot gold rose 0.3% to $1,800.47 per ounce by 0904 GMT. U.S. gold futures were up 0.2% at $1,804.00.