A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Aug. 23, 2021.
Michael Nagle | Bloomberg | Getty Images
U.S. stock futures were quiet on Monday morning as investors readied for the final trading days of August.
Dow Jones Industrial average futures rose 10 points, or less than 0.1%. S&P 500 futures gained 0.1% and Nasdaq 100 futures traded 0.1% higher.
Monday and Tuesday mark the last two trading days of August. Thus far, the S&P 500 is up 2.6% in August. The Dow Jones Industrial Average and the Nasdaq Composite rose 1.5% and 3.1% this month, respectively.
Key technology shares were higher in premarket trading. AMD and Nvidia were higher by about 1%. Amazon and Microsoft were also higher.
The S&P 500 and the Nasdaq Composite closed at all-time highs on Friday as investors breathed a sigh of relief after Federal Reserve Chair Jerome Powell signaled bond tapering could start this year, but the central bank is in no rush to hike interest rates.
Powell said inflation is solidly around the central bank’s 2% target rate, one of the goals of the Fed’s dual mandate; however, the Fed chairman also explained why he continues to think the current inflation rise is transitory and will eventually drop to the target level.
Based on statements from other Fed officials, a tapering announcement could come as soon as the Fed’s Sept. 21-22 meeting. Powell said the central bank has “much ground to cover” to reach its other goal of maximum employment.
“With record GDP and earnings growth, rising inflation and the rates of infection from the Delta variant peaking, the Fed will feel more pressure to remove what is essentially emergency monetary accommodation,” wrote Morgan Stanley’s Mike Wilson, who sees a 10% correction soon in the market. “We expect a more formal signal from the Fed at the September FOMC meeting, and the markets are likely to anticipate it. That means higher interest rates and lower equity valuations.”
Stocks could stay largely range-bound until the release of August’s jobs report on Friday. Economists polled by Dow Jones expect 750,000 jobs were created in August and the unemployment rate fell to 5.2%.
Friday’s gains added to a strong week for the major averages. The Dow finished up 0.9%, while the S&P 500 added 1.5% and the Nasdaq Composite gained 2.8% last week.
With the Fed’s Jackson Hole meeting in the rearview, investors are now focused on the direction of stocks for the final months of the year. The S&P 500 is up more than 20% in 2021 but the market is also absorbing peak policy stimulus, peak earnings acceleration and peak reopening momentum.
Oil futures were lower and gasoline futures were higher slightly in a minimal reaction to Hurricane Ida making landfall over the weekend.