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U.S. stock futures are slightly higher as the market tries to restart rally, energy stocks gain

U.S. stock futures are slightly higher as the market tries to restart rally, energy stocks gain

07 Jul 2021

Tourists visit the Wall Street bull statue in the Financial District, New York City.

Drew Angerer | Getty Images

U.S. stock futures traded in slightly positive territory early Wednesday morning after the S&P 500 ended a seven-day winning streak, its longest since August.

Dow Jones Industrial Average futures rose just 25 points. S&P 500 and Nasdaq 100 futures both traded in mildly positive territory.

Energy stocks were set to gain as oil prices increased. WTI crude touched a 6-year high briefly on Tuesday before retreating. Crude was back up about 2% on Wednesday. Devon Energy, Occidental Petroleum and APA Corp were higher in premarket trading.

Bank shares including Goldman Sachs and JPMorgan Chase continued their retreat on Wednesday as long-term bond yields fell further, hurting the industry’s profitability prospects. Defying many predictions, the 10-year Treasury yield fell to 1.35% on Wednesday. Yields on the short-end of the so-called Treasury curve, including 1-year bills and 2-year notes, were flat to higher.

During the regular session on Tuesday, the 30-stock Dow fell 208.98 points, or 0.6%. The S&P 500 ended the day down by 0.2%, retreating from a record. The Nasdaq Composite rose nearly 0.2%. The tech-heavy index rose to a fresh all-time high on Tuesday.

Investors may be worried the economy might be approaching its peak and that a correction could be on the way. In addition to complacency in the market, the combination of profit-margin pressures, inflation fears, Fed tapering and possible higher taxes could contribute to an eventual drawdown, market strategists say.

Recovery-centered stocks like Caterpillar, Chevron and JPMorgan Chase pulled back Tuesday while Big Tech stocks like Amazon, Apple and Alphabet gained.

The 10-year Treasury yield fell 7.2 basis points to 1.36% on Tuesday as investors react to the potential of slower economic growth. That was its lowest level since February.

Investors will be listening more clues on the direction of the Federal Reserve’s monetary policy when it releases its latest meeting minutes Wednesday afternoon, which could be a catalyst for a move in both bonds and stocks.

The Fed’s minutes are expected to be dovish with the central bank looking for progress in the labor market and not worried that recent inflation will become a persistent trend. Slowing down the bond buying would be the Fed’s first major retreat from the easy policies it put in place when the economy shut down last year.

The end of the Fed’s $120 billion a month in Treasury and mortgage purchases would also signal that the central bank’s next move could be to raise interest rates.

Weekly mortgage applications and the Job Openings and Labor Turnover Survey are also scheduled to be released Wednesday.

— CNBC’s Patti Domm contributed reporting.