Inventory futures rise because the market tries to regain file highs
US stock index futures barely changed overnight on Tuesday as the market tried to regain record highs.
Contracts tied to the Dow Jones Industrial Average scored 36 points. S&P 500 futures gained 0.12% while Nasdaq 100 futures were flat.
The move came after major averages closed lower on Tuesday and abandoned early gains that drove stocks to record highs on the opening bell. Both the Dow and S&P 500 posted three-day winning streaks, each falling 0.22%. The Nasdaq Composite was meanwhile down 0.38%.
The Russell 2000 closed 1.85% lower for the third year in a row.
In Washington, lawmakers continued to disagree on direct payments to Americans. Senate Majority Leader Mitch McConnell blocked Chuck Schumer’s efforts to accelerate the House of Representatives bill passed late Monday that would increase checks from $ 600 to $ 2,000. The stimulus payments could run out on Tuesday evening, said Treasury Secretary Steven Mnuchin.
President Donald Trump backed higher payments and said in a tweet on Tuesday that the move should be approved “ASAP. $ 600 is not enough!”
With only two trading days a year left, the key averages are on the way to rising higher by 2020. The Dow rose 6.3% over the year while the S&P 500 rose 15.36%. Despite recent selling pressures, the Russell 2000 is still up 17.4% over the year.
The clear winner since the beginning of the year remains the Nasdaq Composite, which is up 43%.
“We expect strong economic growth to pick up again in 2021 after the headwinds from the pandemic in 2020 and the US-China trade war in 2019,” said Brian Demain, portfolio manager at Janus Henderson Investors. “While the lead so far has been tight – mostly confined to the digital economy – we expect a deepening recovery as vaccines become widespread and consumers can re-enter the physical economy,” he added.
The number of Covid cases is still higher. The US currently has at least 180,905 new cases and at least 2,210 virus-related deaths every day, based on a seven-day average calculated by CNBC using data from Johns Hopkins University. On Tuesday, the US confirmed its first case of the faster-spreading strain of coronavirus, originally discovered in the UK
Some investors say another potential headwind for stocks looking to the future is the surge in some of the hottest stocks of the year.
Interactive Brokers Chairman Thomas Peterffy said on Squawk Alley on Tuesday that a “fantastically unusual” thing had happened in the past few days: his customers are net below the market for the first time.
“Our customers have a tendency to sell options, and there is such a demand for these out of the money options that our customers have a tendency to become sellers,” he said. “So the Robinhood people have long options and Interactive Brokers clients have few options,” he added. In other words, while this isn’t necessarily a direct downside bet, customers on the other hand take advantage of such high demand.
Charles Bobrinskoy, vice chairman of Ariel Investments, echoed the dangers of a dynamic market.
“It cannot be that the way to win investing is just to buy what has increased in recent years,” he said on CNBC’s Closing Bell on Tuesday. “That works in momentum markets. Momentum markets are wonderful until they turn. But when they turn, it’s ugly,” he said.
Subscribe to CNBC PRO for exclusive insights and analysis as well as live business day programs from around the world.