US stock index futures were slightly higher in early morning trading on Wednesday as the market tried to rebound record highs.
Contracts linked to the Dow Jones Industrial Average yielded 71 points. S&P 500 futures and Nasdaq 100 futures traded in slightly positive territory.
The move came after the big averages closed lower on Tuesday, giving up early gains that pushed stocks to record highs at the opening bubble. Both the Dow and S&P 500 achieved three-day streaks, each of which declined 0.22%. The Nasdaq Composite, meanwhile, was down 0.38%.
The Russell 2000 closed 1.85% lower for its third consecutive negative session.
In Washington, lawmakers continued to disagree over direct payments to Americans. Senate Majority Leader Mitch McConnell blocked Senate Minority Leader Chuck Schumer’s attempt to speed up the bill passed by the House on Monday, pushing checks from $ 600 to $ 2,000. Incentive payments could go out as early as Tuesday night, Treasury Secretary Steven Mnuchin said.
President Donald Trump has backed higher payments, saying in a tweet Tuesday that the move “ASAP. $ 600 IS NOT ENOUGH!”
With only two trading days left in the year, the main averages are on track to close 2020 higher. The Dow is up 6.3% this year, while the S&P 500 is up 15.36%. Despite some recent sales pressure, the Russell 2000 is still up 17.4% this year.
But the clear winner of the year so far remains the Nasdaq Composite, which has won 43%.
“We expect strong economic growth to resume in 2021 as a result of the pandemic headwinds in 2020 and the 2019 trade war between the US and China,” said Brian Demain, portfolio manager at Janus Henderson Investors. “While leadership has so far been narrow – mostly confined to the digital economy – we envision a broader recovery as vaccines are widely deployed and consumers can re-enter the physical economy,” he added.
The number of Covid cases keeps ticking higher. The US is now registering at least 180,905 new cases and at least 2,210 virus-related deaths every day, based on a seven-day average calculated by CNBC based on data from Johns Hopkins University. On Tuesday, the US confirmed its first case of the faster-spreading coronavirus strain initially discovered in the UK
Some investors say that another potential headwind for forward-looking stocks is the run-up to some of the hottest stocks of the year.
Thomas Peterffy, Chairman of Interactive Brokers, said on “Squawk Alley” on Tuesday that something “fantastically unusual” has happened in recent days: his customers are entering net shortages for the first time.
“Our clients tend to be on the sell side of options, and there is such demand for these out of the money options that our clients tend to become sellers,” he said. “So the Robinhood folks are long into these options, and Interactive Brokers customers are short of these options,” he added. In other words, while it’s not necessarily an outright gamble on a downside, customers on the other end are benefiting from such high demand.
Charles Bobrinskoy, vice chairman at Ariel Investments, reiterated the dangers of a momentum-driven market.
“It can’t be that the way to win by investing is to just buy what has gone up in recent years,” he said on CNBC’s “Closing Bell.” “That works in momentum markets. Momentum markets are great until they turn. But when they turn, it’s ugly,” he said.
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