Dow futures jump 200 points in overnight trading following the worst tech rout since March


The “Fearless Girl” statue stands in front of the New York Stock Exchange (NYSE) at Wall Street on June 29, 2020 in New York City.

Angela Weiss | AFP | Getty Images

Stocks futures climbed in overnight trading on Monday after technology shares suffered their worst sell-off in more than five months.

Futures on the Dow Jones Industrial Average gained about 215 points, while the S&P 500 futures rose 0.5%. The Nasdaq 100 futures, however, dipped 0.2%.

Stocks just snapped a five-week winning streak after a big reversal in major technology stocks last week. Steep losses in Amazon, Apple, Microsoft and Facebook — 2020’s market leaders — drove the tech-heavy Nasdaq Composite down 3.3% to suffer its worst week since March 20. The Dow and the S&P 500 fell 1.8% and 2.3% last week, respectively, posting their biggest weekly losses since June. 

Many on Wall Street believe the weakness derived from worries that the massive tech run-up pushed valuations to unsustainable levels. The aggressive buying of growth stocks has also been spilling into the options markets. Even with last week’s pullback, the Nasdaq is up more than 70% from its March bottom. 

“Given how extreme many of the indicators we follow had become by early this past week, we believe it will take more than just a mild decline to work off those conditions,” Matt Maley, chief market strategist at Miller Tabak, said in a note on Sunday. “Therefore we still believe a correction of more than 10% is probable.”

Maley pointed to the extreme overbought conditions in some of the megacap tech names as well as the elevated valuation levels for the S&P 500. 

Last week’s Big Tech slump coincided with an outperformance in cyclical stocks — names most sensitive to the economic recovery. The S&P 500 materials and financials sectors were the two biggest winners in the prior week, up 2.3% and 0.9%, respectively.

Amid the big rotation, the Cboe Volatility Index, known as the VIX or the market’s “fear gauge,” hit a high of 38.28 on Friday, its highest level since June 15.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.



Source link

Discover

Sponsor

Latest

COVID Vaccine Could Be Given Before Tests End

Aug. 31, 2020 -- Emergency use authorization or approval...

India crosses 4 million coronavirus cases with record surge

Pedestrians wearing protective face masks in front of a mural in New Delhi, India on July 21, 2020.Yawar Nazir | Getty ImagesIndia's total...

U.S. is still in a ‘very significant recession’ despite job gains, Fed’s Rosengren says

Job creation in August represents continued improvement in the U.S. economy but a full recovery won't happen until the coronavirus pandemic is under...

2021 Ford Bronco won’t get V8 engine due to emissions constraints

Ford doused cold water on the rumors claiming the born-again Bronco will sooner or later gain an optional V8 engine. While an eight-cylinder...

SoftBank loses $12 billion in market cap on ‘Nasdaq whale’ reports

SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son speaks during a press conference on November 6, 2019 in Tokyo, Japan.Tomohiro Ohsumi...