Wall Street Prepares for Lower Open
Wall Street was set to open lower in stock trading on Tuesday. COVID-19-related worries and simmering US-China tensions weighed on sentiment. This was at the end of what investors expect to be the S&P 500’s best quarter since 1998.
The benchmark index has rebounded about 18 percent since April on a raft of fiscal and monetary stimulus. This includes the easing of restrictions, but it is still down about 5% over the year. That was as a resurgence in virus cases fueled fears of a new round of lockdowns.
California and Texas marked a record spike in cases on Monday. Investors are hoping for more stimulus to shore up the domestic economy.
Stephen Innes, a market strategist at AxiCorp, said traders remain cautious, waiting for the next catalyst. Moreover, they are keeping risk on a short leash over the long weekend.
COVID-19 de-risking playbooks are still in play, he said. And stock investors are not aggressively buying dips while booking profit quickly, he added.
Federal Reserve Chair Jerome Powell is due to testify before the U.S. House of Representatives Financial Services Committee. He said in prepared remarks that the outlook for the world’s biggest economy was extraordinarily uncertain.
US-Sino tensions began heating up, with Washington beginning to eliminate Hong Kong’s special status under U.S. law. This is in response to China’s national security law for the territory. China’s parliament passed the legislation on Tuesday, and it said it would retaliate.
If the environment between the U.S. and China continuously deteriorates, the market is not going to be happy. But there’s very little known about what’s going on with those new laws. So, there’s not much of an impact yet, said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in N.Y.
Also, analysts warned of increased volatility, as traders rebalance their portfolios at the end of the quarter.
A Data-heavy Week for Wall Street
Meanwhile, kicking off a data-heavy week for Wall Street, traders expected consumer confidence to have climbed. It rose to 91.8 in June from 86.6 in May. Furthermore, data on manufacturing activity and employment are due on Wednesday and Thursday.
At 8:34 a.m. ET, Dow e-minis <1YMcv1> fell 127 points, or 0.50%. S&P 500 e-minis fell 11 points, or 0.36% and Nasdaq 100 e-minis fell 26 points, or 0.26%.
Stock market news reported that, in premarket moves, Boeing Co (N: B.A.) tumbled by 3.1%. This was after Norwegian Air (O.L.:NWC) canceled orders for 97 aircraft and said it would claim compensation.
Micron Technology Inc (O: M.U.) rose 5.5% as it forecast higher-than-expected current-quarter revenue. This was on strong demand for its chips, which power notebooks and data centers.
Uber Technologies Inc (N:UBER) was up 3.8%. This came after reports said the ride-hailing services company was in talks to buy food-delivery app Postmates.
