Inventory futures flat after Monday’s session lower the successful streak
US stock futures were flat overnight on Monday after breaking a profit streak as investors worried about the stretched valuations of the stocks.
Dow Futures rose 5 points. S&P 500 futures rose 0.02% and Nasdaq 100 futures rose 0.08%.
Shares fell on Monday as investors valued high stock valuations amid recent record highs, seemingly disregarding the Covid-19 backdrop and political turmoil.
On Monday, the Dow Jones Industrial Average lost nearly 90 points, hurt by a 2.3% drop in Apple stock. The S&P 500 fell 0.66%
The Nasdaq Composite was the relative underperformer, falling 1.25% as Facebook, Amazon, Netflix and the Google parent alphabet all closed lower.
Tesla closed 7.8% for its first negative day in 12 and its worst day since September 23
Jeff Gundlach, founder of DoubleLine Capital, warned on Monday of the extremely high valuations of the market by historical standards amid the risk of rising inflation.
“We are here with extraordinarily high ratings and it is supported by massive impulses,” Gundlach told CNBC’s Scott Wapner in the “mid-term report”.
“If you go back four decades of stock market data, there are a lot of valuation metrics that are in the top 1 percentile of overvaluation. Of course, what keeps them going is the Fed with rates at zero and promises to stay at zero,” added Gundlach . This “enables ratings to be record-breaking.”
“Historically, when momentum and sentiment indicators are this high, the market is facing a period of consolidation,” said Mark Hackett, chief of investment research at Nationwide.
Stocks have had a strong week of gains, pushing all three major averages to record highs. The top averages shrugged as House Democrats launched an impeachment article against President Donald Trump on Monday for inciting the attack. The lower chamber plans to vote on the article sometime this week.
Monday outperformers were those most sensitive to economic growth, such as banks, retailers, and certified small caps. Last week President-elect Joe Biden promised a stimulus program that will be in “trillions of dollars”.
The small-cap benchmark Russell 2000 lost 0.03% on Monday.
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