Inventory futures are falling after a stable begin into Might, tech shares anticipated to fall
Stock futures fell Tuesday, with tech stocks leading the decline.
The retreat follows a strong start to May as investors on Monday piled into stocks that would benefit the most from an economic reopening.
Futures on the Dow Jones Industrial Average lost 140 points. S&P 500 futures fell 0.5%. Futures for the tech-heavy Nasdaq-100 were the hardest hit, falling 0.9%.
Futures on the S&P 500 were essentially flat for most of the morning before sales of technology stocks and Nasdaq futures spiked.
Apple, Tesla and Alphabet all fell 1% and hit pre-market lows.
Counteracting this were stocks that rose on the back of strong gains. Pfizer stock rose 1% in premarket trading after posting quarterly results that beat expectations and raised its guidance for 2021. CVS Health stocks rose 3% after the pharmacy chain and insurance company also raised their forecasts.
United States Steel gained 3% in premarket trading after Credit Suisse upgraded its stock from underperforming to outperforming. The rise in steel prices made it clear that the industry was in a “super cycle”.
The movement in futures came as investors struggled to decide which stocks to ride and which stocks should fall from here with the market high at all time highs. Investors are torn between reopening with stocks like retailers or continuing to bet on big tech that has just reported blockbuster profits.
“The whole thing for me is this amazing leadership problem,” Frank Gretz, technical analyst at Wellington Shields, told CNBC. “There were 2,800 stocks on the New York Stock Exchange yesterday, but it was hard to make money. It’s a very unusual pattern. It’s just the difference between these reopened stocks and the tech stocks.”
The futures move followed solid gains for the Dow on Monday. The 30-share benchmark gained more than 200 points, while the S&P 500 gained 0.3%. Retail stocks led the market, with Gap and Macy’s gaining more than 7%. Dillard’s rose nearly 10% while Urban Outfitters and Kohl’s both rose more than 5%.
“Boeing and Delta have seen strong trading activity as investors may take advantage of price declines and look to reopenings,” said Chris Larkin, chief executive officer for trading and investing products, E-Trade Financial.
States continued to relax pandemic restrictions during the introduction of the vaccine. New York Governor Andrew Cuomo announced that most capacity restrictions in New York, New Jersey and Connecticut will be lifted, while 24-hour subway service in New York City will resume later this month.
Florida Governor Ron DeSantis signed an executive order on Monday immediately lifting the state’s remaining health restrictions.
The Dow and S&P 500 were just seeing their consecutive months of earnings, bringing their gains over 11% each in 2021.
“Many of the factors driving markets remain, including vaccination optimism, economic reopening, and accelerating earnings, although inflation and valuation concerns remain,” said Mark Hackett, Nationwide’s chief of investment research.
Warren Buffett said Saturday that he sees “very significant inflation” in Berkshire Hathaway’s corporate collection amid the economic recovery.
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– with reports from Jesse Pound of CNBC.