Stock futures rise slightly after massive sell-off on Wall Street

Stock futures edged up in trading overnight on Monday following a sell-off as investors continued to shed high-profile stocks in the face of rising rates.

Futures contracts on the Dow Jones Industrial Average climbed 45 points. S&P 500 futures gained 0.2% and Nasdaq 100 futures gained 0.3%.

On Monday, the Nasdaq Composite fell 2.1% for its sixth negative day in seven as tech heavyweights Apple, Alphabet, Amazon and Microsoft all fell at least 2%. Facebook shares slipped 4.9%. The Dow blue chips lost more than 300 points, while the S&P 500 lost 1.3%.

“Investors have become increasingly uneasy as accelerating economic activity and monetary stimulus give way to slower growth and policy normalization,” Seema Shah said. , Chief Strategist of Principal Global Investors.

A recent surge in bond yields has prompted investors to shy away from highly valued tech stocks, as higher rates make their future earnings less attractive. The 10-year Treasury yield traded slightly higher to 1.48% on Monday after peaking at 1.56% last week.

The market had a tumultuous September as inflation fears, slower growth and rising rates kept investors spellbound. The S&P 500 fell 4.8% last month, posting its worst month since March 2020 and breaking a seven-month winning streak. The benchmark equity index is now at 5.4% of its all-time high reached in early September, but has still gained 14.5% since the start of the year.

In Washington, lawmakers are still trying to agree to raise or suspend the US borrowing limit and avoid a dangerous first default on the national debt. The Treasury Department warned last week that lawmakers must settle the debt ceiling by Oct. 18, when officials believe the United States will exhaust its emergency efforts to honor its bond payments.

Still, some believe the outlook for equities remains robust after the weak September as the economy continues to rebound from the Covid crisis.

“We do not believe that the recent risk reduction will lead to lasting declines and maintain the position to continue buying in any weakness,” said Marko Kolanovic, chief global markets strategist at JPMorgan, in a note.