U.S. equity futures were flat Tuesday night after the Dow Jones Industrial Average lost nearly 300 points amid growing investor concerns about the state of the economic recovery and the Federal Reserve’s next move.
Futures contracts on the Dow Jones Industrial Average rose 8 points, or 0.02%. S&P 500 and Nasdaq 100 futures rose 0.05% and 0.08%, respectively.
In regular trading on Tuesday, the Dow Jones fell 292.06 points, or 0.8%, to 34,577.57, retreating after ending a five-day losing streak on Monday. The S&P 500 lost 0.6% to close at 4,443.05 and the Nasdaq Composite slipped 0.5% to 15,037.76.
The Dow, S&P and Russell 2000 Small Cap have now traded in the red for six of the past seven days. Tuesday marked the fifth consecutive day of losses for the Nasdaq. September has historically been a month of decline for markets, which have experienced an average decline of 0.56% in the month since 1945, according to the CFRA. And after eight consecutive months of gains, strategists say a major pullback could be imminent.
The S&P 500 continued to climb throughout the year, only once falling below the 50-day moving average, according to Fundstrat. Mike Wilson, chief investment officer at Morgan Stanley, told CNBC’s “Fast Money” that this might just be the start.
“The mid-cycle transition always ends with an index correction,” he said of the S&P 500. “Maybe it will be this week, maybe a month. I don’t think so. not that we’ll be done with this year, though, with that 50-day moving average that holds throughout the year, as that’s the trend we typically see in this part of the recovery phase. ”
On Tuesday, the Labor Department released data before the bell showing a weaker-than-expected rise in US inflation for August. Consumer prices increased 5.3% from a year ago and 0.3% from July. Excluding food and energy, the consumer price index rose only 0.1% for the month.
Initially, markets recovered, but fell back after the market opened as uncertainty over the timing of the Federal Reserve’s reduction in asset purchases set in.
“The Federal Reserve is likely to delay the slowdown in its purchases of Treasury securities and mortgage-backed securities despite slight indications that the rise in durable goods prices is transient, as illustrated by the decline in the prices of passenger cars. opportunity, ”said Dawit Kebede, senior economist at Credit Union. National association. “It’s because we are far from the maximum number of jobs,” one of the two objectives of the Fed during its dual mandate.
While the data was colder than expected, inflation is still on the rise, according to Brad McMillan, chief investment officer for the Commonwealth Financial Network.
“We will likely see inflation skyrocket for at least the rest of the year and most likely until 2022,” he said. “But we are seeing the trend change, which shows that the base change is taking effect and the economy is recovering.”
Stocks linked to the economic recovery edged down on Tuesday. United Airlines fell 2.1% and Bank of America lost 2.6%. General Electric closed 3.9% lower.
Casino stocks have been hit hard as the Macau government seeks to increase regulatory control over casinos and Chinese health authorities report a Covid-19 outbreak. Las Vegas Sands fell 9.7%, Wynn Resorts fell 10.8%, and MGM resorts fell 3.9%.
Apple shares closed nearly 1% lower after the company showcased the iPhone 13 at its annual product unveiling event.
Wednesday is the last day of the SALT conference in New York. In terms of economic data, US import and export prices and mortgage application data are expected to be released on Wednesday.