US stock futures were flat during overnight trading on Monday after breaking a earnings streak as investors worried about overvaluation of stocks.
Dow futures were up 20 points. S&P 500 futures were down 0.07% and Nasdaq 100 futures were down 0.18%.
Shares fell on Monday as investors evaluated high stock valuations amid recent record highs, seemingly ignoring the backdrop of Covid-19 and political unrest.
On Monday, the Dow Jones Industrial Average lost nearly 90 points, with shares of Apple falling 2.3%. The S&P 500 fell 0.66%
The Nasdaq Composite was the relative underperformer, falling 1.25% as Facebook, Amazon, Netflix, and Google parent Alphabet all closed lower.
Tesla closed 7.8% for its first negative day in 12 and its worst day since September 23
DoubleLine Capital founder Jeff Gundlach warned Monday of the market’s extremely high valuations against historical standards amid the risk of rising inflation.
“At extraordinarily high valuations is where we are, and it’s backed by massive amounts of stimulus,” Gundlach told CNBC’s Scott Wapner on “Halftime Report.”
“If you go back four decades of stock market data, there are a lot of valuation metrics that are in the top 1 percentile of overvaluation. So of course the thing that keeps it going is the Fed with interest rates at zero and pledging to stay at zero,” he added. Gundlach adds, saying that “valuations can be record-breaking high.”
“Historically, when momentum and sentiment indicators are so tense, the market is in for a period of consolidation,” said Mark Hackett, Nationwide’s head of investment research.
Stocks come after a strong week of gains that drove all three major averages to record highs. The major averages pulled off the riots in the US Capitol that led to the House Democrats on Monday introducing an article impeaching President Donald Trump for instigating the attack. The lower chamber plans to vote on the article sometime this week.
The outperformers were most sensitive to economic growth on Monday, such as banks, retailers and certaub small-caps. Last week, President-elect Joe Biden promised a rollout of economic stimulus measures, which he said will be “in the trillions of dollars.”
The small-cap benchmark Russell 2000 lost 0.03% on Monday.
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