U.S. Stock Futures Mixed On Tuesday Morning
We’ve got a short week ahead of us. I hope everybody has enjoyed the Labor Day weekend. We are set to kick off another volatile week on Wall Street. The U.S. stock futures are showing a mixed outlook on Tuesday after tech stocks suffered their worst sell-off since the stock market downturn in March. Futures on the Dow were moving 0.04% higher as of 6.15 am ET. The S&P 500 and Nasdaq 100 futures, on the contrary, traded in the negative territory.
Big Tech Tumbles; Will It Continue This Week?
The stock market rally had flashed warning signs in the days leading up to last week’s sharp sell-off, fueled by Tesla (TSLA Stock Report) and Apple’s (AAPL Stock Report) stock splits and work from home stocks like Salesforce.com (CRM Stock Report) and Zoom Video Communications (ZM Stock Report). The sell-off in U.S. stocks could go on for another day, by making reference to history, according to Fundstrat Global Advisors LLC. The consecutive losses came after a rare combination of a strong run-up and an increase in volatility, unusually heavy options volume, and the outperformance of the mega caps. Some observers see this as a healthy correction, rather than a longer-term decline. That is also the view that Fundstrat holds.
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U.S.- China Tension Intensifies
Since the onset of COVID-19 pandemic, tensions in the South China Sea have surged. And over the weekend, the Trump administration is considering adding China’s semiconductor manufacturer to trade blacklist, another sign of heightening tensions.
The Department of Defense is in discussions over whether Semiconductor Manufacturing International Corporation, China’s largest manufacturer of semiconductors should be added to the Commerce Department’s entity list. The list essentially restricts those companies from receiving specific goods made in the United States. The U.S. entity list now includes more than 300 China-based companies. This is part of an ongoing effort to put pressure on China’s technology firms. It would mark a major escalation in the tech battle between the two largest economies.
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Gold Price Starting Lower After ECB Stimulus
The gold market went back and forth during the trading session on Monday, and as it was Labor Day. Gold prices have been hovering around the $1,920 level. New stimulus measures from the ECB would boost the U.S. dollar and, in turn, drive gold prices down. This has brought a lot of volatility to the gold space. The gold price seems to be holding steady in recent weeks. It has been trading above $1,900 and that’s great news for gold investors. After all, if we are expecting an uptrend in the medium term, a healthy consolidation would be inevitable. When the correction is over, the fundamentals that ignited gold’s rally should continue to support prices.
Earnings Season Slowing Down
Only a handful of large-cap companies are set to report their earnings, but a couple will be closely watched. Newly listed companies are set to report their earnings for the first time this quarter. Among them are Peloton (PTON Stock Report) and Slack (WORK Stock Report), both of which are likely to benefit during the pandemic. Their products have seen an uptick in demand as customers work and learn remotely. Other bigger names reporting this week are LuluLemon Athletica (LULU Stock Report), GameStop (GME Stock Report), and Dave & Buster’s (PLAY Stock Report).