Stock futures were little changed Monday evening as Wall Street waits to see if last week’s market rally can find new momentum.
S&P 500 futures rose less than 0.1%. Nasdaq 100 futures were down less than 0.1%, while futures tied to the Dow Jones Industrial Average added 44 points, or about 0.1%.
The moves in futures follow a relatively calm trading session on Monday that saw the S&P 500 grind higher by 0.09% for its sixth straight positive session. The Dow gained about 137 points, or 0.32%, while the Nasdaq Composite ticked up just 0.02%.
While Monday’s gains were marginal, they do add to what has been a rapid and sharp rebound for stocks over the past five weeks. The S&P 500 is now just 3% from its record high.
The gains came despite continued uncertainty around the impact of tariffs on the economy and worries about a potential U.S. recession. Investors even shrugged off the downgrade of the U.S. government’s credit by Moody’s Ratings.
That backdrop has led to some skepticism about the rally, but Carson Group chief market strategist Ryan Detrick told CNBC that the rebound should be taken seriously.
“All these worries and concerns are real. We’re not ignoring everything that’s out there. But are we listening to what the market’s doing, right? The previous 27 trading days, the S&P 500 is up close to 20%. … That’s not a bear market rally. That’s not a short-covering rally,” Detrick said Monday on “Closing Bell: Overtime.”
Earnings reports will provide some fodder for the debate about the U.S. economy on Tuesday. Home Depot is set to report its latest results in the morning, while homebuilder Toll Brothers will release its quarterly report after the market closes.
Traders will also keep an eye out for commentary about the Federal Reserve’s interest rate policy, as several central bank officials are scheduled to speak on Tuesday, including St. Louis Fed President Alberto Musalem.
Big Tech stocks outperforming in May
As the market has gotten closer to its record high, the megacap tech stocks have reasserted their leadership.
This month, the Roundhill Magnificent 7 ETF (MAGS) is up more than 13%, while the Nasdaq 100-tracking Invesco QQQ Trust (QQQ) is up 9.8%. Meanwhile, the SPDR S&P 500 ETF (SPY) is up 7.3% month to date, and the Invesco S&P 500 Equal Weight ETF (RSP) trails even further behind with a 6.4% gain.
One outlier to this trend is Apple, which is down about 1.8% month to date.
— Jesse Pound
Storm clouds on Treasurys’ horizon, with or without Moody’s downgrade: Capital Economics
Friday’s credit downgrade of the U.S. by Moody’s Ratings comes at what was already a “tough time” for the Treasury market, according to a strategist for Capital Economics.
“The decision by Moody’s to downgrade the U.S. government’s credit rating highlights that there are several potential storm clouds on the horizon for Treasuries,” wrote Thomas Mathews, head of markets for Asia Pacific.
Sentiment toward the safe-haven status of Treasuries “has arguably deteriorated a bit of late, and the Moody’s downgrade comes at a slightly more fragile time for the U.S. bond market,” than was the case when Standard & Poor’s downgraded U.S. debt in 2011, Mathews wrote.
“It’s becoming easier to build a more-negative case for the fortunes of the world’s largest bond market,” Capital Economics said, citing multiple causes of concern:
- Long-dated Treasurys that have yet to fully recover from their “April dislocation”
- Concerning debt levels and the outlook for still “greater issuance”
- Remote odds for “serious efforts to tackle the U.S. fiscal position”
- Debt ceiling talks later this year that are likely to prove fractious
- Political pressure on the Federal Reserve from the Trump White House
- Shaky demand from Asian buyers
— Scott Schnipper
Equity futures open little changed
Stock market futures were calm when trading resumed at 6 p.m. in New York. S&P 500 futures were down less than 0.1%.
— Jesse Pound
