Stock futures pointed toward a lower open Monday morning as investors took a pause following last week’s record-setting rally.
Contracts on the S&P 500 dipped 0.6% after the index reached a record closing high on Friday. Dow futures dropped by more than 200 points, or 0.6%, while those on the Nasdaq decreased by 0.5%.
Last week, stocks had kicked off 2021 on a strong note even amid last week’s violent protest at the U.S. Capitol, as markets looked through the near-term political turbulence and ahead to prospects of greater fiscal stimulus and other support that would likely come about under a unified Democratic government.
“Unprecedented is an overused word these days, but this past week it was used often and without hyperbole,” Societe Generale strategist Klaus Baader said in a note Monday morning. “Markets are looking past Trump’s final days. The inauguration on Jan. 20 is a key event. Policy supports, both fiscal and monetary, will be crucial for investor confidence. Reflation is the theme. Further stimulus can help in the short term.”
A number of economists and equity strategists have recently upgraded their forecasts for economic and earnings growth as more aid appeared increasingly likely under the new administration. In recent notes, Deutsche Bank economists raised their U.S. real GDP growth forecast by about two percentage points to 6.3% year-over-year for the fourth quarter, and Goldman Sachs equity strategists increased their 2021 S&P 500 earnings per share growth rate by two percentage points to 31% over 2020.
“Democratic control of Washington, D.C. after January 20 will bring greater fiscal spending, faster GDP growth, more inflation, and higher interest rates than we had previously assumed,” the Goldman Sachs strategists led by David Kostin said in a note.
Meanwhile, internet tech stocks came under pressure Monday morning after many of these companies banned President Donald Trump and cracked down on other accounts spreading misinformation, in a watershed moment for some platforms that had previously abdicated responsibility over regulating much of the content users posted on their sites.
Shares of Twitter (TWTR) fell nearly 7% in pre-market trading after the social media platform permanently banned Trump from the social media platform on Friday, citing the risk that he would try to incite further unrest among his supporters after last week’s violent protests at the U.S. Capitol. Facebook (FB) shares also sank more than 1.5% after suspending Trump’s Facebook and Instagram accounts until at least the end of his term, and Snap (SNAP) shares were down 1% after disabling Trump’s account last Wednesday. Apple (AAPL) and Google (GOOGL) also removed Parler from their respective app stores after saying the company did not do enough to address violent threats on its platform, and Amazon (AMZN) said it would no longer host Parler on Amazon Web Services.
7:22 a.m. ET Monday: Stock futures point to a lower open
Here were the main moves in markets, as of 7:22 a.m. ET Friday:
S&P 500 futures (ES=F): 3,794.75, down 22.75 points or 0.6%
Dow futures (YM=F): 30.777.00, down 216 points or 0.7%
Nasdaq futures (NQ=F): 13,029.00, down 68.25 points or 0.52%
Crude (CL=F): -$0.29 (-0.56%) to $51.95 a barrel
Gold (GC=F): +$13.20 (+0.72%) to $1,848.60 per ounce
10-year Treasury (^TNX): -0.9 bps to yield 1.098%