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Stock Futures Were Flat After Dow Jones Fell on Tuesday 

On Wednesday morning stock futures were flat after the Dow Jones Industrial Average dropped more than 200 points one day earlier as investors analyzed the growth outlook following a smooth ride in the market in 2021. 

The S&P 500 dropped 0.3% to 4,520.03 on Tuesday in relatively thin trading following the Labor Day weekend. The New York Stock Exchange was closed on Monday for Labor Day. The Dow Jones Industrial Average fell 269.09 points to 35,100.00, dragged down by a 1.8% loss in Boeing’s stock. The Nasdaq Composite gained less than 0.1% to 15,374.33, notching a record close. 

Over the weekend, Goldman Sachs downgraded its economic outlook, citing the delta variant and fading fiscal stimulus. It now expects 5.7% annual growth in 2021, below 6.2% consensus. Goldman Sachs reduced its fourth-quarter gross domestic product (GDP) outlook to 5.5% down from 6.5%.  

 

Dow Jones Industrial Average and main findings 

The Dow Jones Industrial Average and the S&P 500 declined on Friday after the August jobs report came in short of expectations. In August, nonfarm payrolls increased by 235,000 but economists expected 720,000 jobs.

Year-to-date, the Dow Jones Industrial Average is up about 14.7% as of September 7. In the meantime, the S&P 500 added 20.3%, and the Nasdaq Composite advanced 19.3%. 

Analysts and investors are bracing for more volatility in September, one of the seasonally weakest months of the year. Price swings could return, especially with the S&P 500 up about 20% in 2021 without a single 5% pullback. The next two months represent a huge risk to growth, policy, and the legislative agenda.

In several hours, the Labor Department will release its closely watched Job Openings and Labor Turnover Survey. The Federal Reserve is also expected to publish its periodic “Beige Book” survey of activity across its 12 districts. 

One of the main catalysts for a sell-ff could be the central bank and the potential for it to pull back an unprecedented monetary stimulus. Jerome Powell who is the current Fed Chair hinted that the central bank is likely to begin withdrawing some of its easy-money policies before the end of the year. But Powell still sees interest rate hikes in the distance. He talked about the Fed’s plans in his speech at the Fed’s annual Jackson Hole, Wyoming symposium. Nonetheless, the coronavirus pandemic and the latest jobs report could change the central bank’s plans for the future. 

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