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Equity futures rose Monday night, indicating Wall Street would open higher at Tuesday’s opening bell, following a volatile session triggered by the sudden unwinding of a hedge fund managed by an investor in fame.
A choppy session in which traders watched several large stocks like Viacom (VIA) and Discovery (DISC) led the Dow to break a new high, but tech stocks and the market in general slipped. Several large stocks were hit after Bill Hwang, a fund manager and former head of Tiger Management’s family office, faced a margin call that forced billions of stocks to sell off.
Bloomberg News reported that Hwang’s firm, Archegos Capital Management, was forced by its banks to sell more than $ 20 billion in shares after some positions were moved against him. Similarly, Swiss banking giant Credit Suisse (CS) has warned that volatility resulting from the liquidation of the company would force the bank to deal a “very significant” blow to its first quarter results.
Despite contagion fears stemming from Archegos’ margin call, the Dow has crept to a new closing high. The week will be rather quiet until Friday, when the March jobs report will be released. The data should show that the economy has created a whopping 630.00 jobs – the most since October 2019 and the best with the start of the COVID-19 pandemic.
The past few weeks have been marked by choppy equity trading, particularly as some of the last few sessions of the first quarter approach. But overall, cyclical energy, financials, and industrials – or the biggest underperformers of 2020 – have outperformed sharply since the start of the year, while leading tech companies of last year are behind schedule. Signs of improving economic growth have crept in, with new unemployment rates falling more than expected on Thursday according to the latest positive reports.
However, a dominant concern for many investors has actually been centered on the pace of economic expansion and whether the post-pandemic recovery, facilitated by the stimulus measures, could advance even more vigorously than expected and cause rapid inflation. In the wake of the passage of a $ 2 trillion stimulus package, the Biden administration is bracing for even more spending – and the likelihood of a tax hike.
“You can be sure that the expenses have a sub-zero multiplier and that tax increases are always an economic drag with the difference measure alone,” noted Peter Boockvar, chief investment officer at Bleakley Advisory Group.
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6 p.m. AND: Stocks getting up after a hectic session
Here’s where the markets were trading Monday night:
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S&P 500 Futures (ES = F): 3966.75, +7.75
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Dow Futures (YM = F): 33086, +54
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Future Nasdaq (NQ = F): 12,977.00, +32.50
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