Stock-index futures traded mixed Monday, with tech-related shares surging ahead of a busy week of earnings that features results from tech giants Apple Inc., Tesla Inc. and Facebook Inc.
What are major benchmarks doing?
- Futures on the Dow Jones Industrial Average YM00 were down 135 points, or 0.4%, at 30,774.
- S&P 500 futures ES00, +0.07% were up 3.80 points, or 0.1%, at 3,838.
- Nasdaq-100 futures NQ00, +0.92% surged 129.50 points, or1%, to trade at 13,491.
Stocks ended mostly lower Friday but logged weekly gains, with the Dow DJIA, -0.57% rising 1.6% and the S&P 500 SPX, -0.30% advancing 1.9%. The tech-heavy Nasdaq Composite COMP, +0.09% ended Friday at a record, leaving it with a weekly rise of 4.2%.
What’s driving the market?
Even as blue-chip industrial stocks looked poised to struggle at the start of this week, tech shares appeared set to extend their gains as investors prepare for a busy week of earnings reports, with roughly a quarter of the S&P 500 due to release quarterly results, including Apple Inc. AAPL, +1.61%, Tesla Inc. TSLA, +0.20% and Facebook Inc. FB, +0.60%.
Large-cap tech-related companies have been the big winners of the COVID-19 pandemic, thriving from the stay-at-home environment, which has also accelerated a number of positive tech trends.
The rally has left valuations for large-cap tech shares stretched, fostering fears of a potential bubble. At the same time, investors remain positive about prospects for additional fiscal stimulus as President Joe Biden pushes for a $1.9 trillion package, though it faces difficult negotiations in a Senate where Democrats have a slim majority.
Stimulus expectations have helped investors look past worries over potentially more contagious variants of the virus that causes COVID-19 as well as snags in vaccine distribution, said Ipek Ozkardeskaya, strategist at Swissquote Bank, in a note.
“With all this, the S&P 500 finds solid support near the 3800 mark as investors can simply not have enough of the historical market rally. No one wants to jump off of the back of a running bull,” Ozkardeskaya said. “So, despite the skyrocketing blue-chip prices, any downside correction to the big U.S. stock indices will likely be seen as interesting dip buying opportunities by investors.”
And the Federal Reserve will hold its first policy meeting of the new year on Tuesday and Wednesday. While no policy moves are expected, Fed watchers expect Chairman Jerome Powell and fellow policy makers to signal a cautious but optimistic outlook while also reinforcing expectations the central bank won’t be quick to ease up on monetary stimulus efforts.
Which companies are in focus?
- Shares of videogame retailer GameStop Corp. GME, +51.08% surged more than 40% in premarket trade, after storming 51% higher on Friday to leave it up more than 240% so far this month. The most recent gains came after short selling firm Citron Research and speculative buyers organizing on Reddit clashed over the videogames retailer.
- AMC Entertainment Holdings Inc. AMC, +17.79% shares jumped 36% ahead of the bell after the world’s biggest cinema-chain operator said it had raised $917 million in debt and equity to help it get through a coronavirus-impacted winter.
- Merck & Co. Inc. MRK, -0.25% shares were down around 1% in premarket trade after the drugmaker said it was discontinuing development of its two COVID-19 vaccine candidates following disappointing trial results, and will instead focus on the development of two investigational therapeutic candidates.
- World Wrestling Entertainment Inc. WWE, +5.57% shares gained over 5% after it announced Monday it had agreed to license its content to NBC Universal’s new streaming service Peacock.
- Shares of Kimberly-Clark Corp. KMB, +0.92% rose 1% in premarket trading Monday, after the consumer products company reported fourth-quarter profit and sales that beat expectations and announced a dividend increase and a new billion stock repurchase program
Which assets are on the move?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.066% slipped about 2 basis points to around 1.067%. Yields and bond prices move in opposite directions.
- Crude oil futures CL.1, -0.17% for February were down 0.2% to $52.18 a barrel, while gold futures GCG21, +0.44% gained 0.3% to 1,862.60 an ounce.
- The Stoxx Europe 600 index SXXP, -0.70% fell 0.8%, while the U.K.’s FTSE 100 UKX, -0.84% tumbled 1.1%. Hong Kong’s Hang Seng index surged 2.4%, topping the key 30,000 level.
- The ICE U.S. Dollar Index DXY, +0.07%, a measure of the currency against a basket of six major rivals, was up 0.1% on the day.