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Stock futures fall after Wall Street closed at record highs to end last week

Dealers work on the floor of the New York Stock Exchange.

NYSE

Stock futures fell in overnight trading Sunday as investors assessed the prospect for more Covid-19 relief stimulus.

Futures on the Dow Jones Industrial Average fell 130 points. S&P 500 tomorrows traded 0.5% lower and Nasdaq 100 slid 0.3%.

The stock market is coming off a solid week to start 2021 as investors looked times gone by a violent siege of the Capitol and focused on the prospect for additional fiscal stimulus after a Democratic sweep of Congress. The S&P 500 climbed for four dates straight to a record with a 1.8% gain last week. The Dow and the tech-heavy Nasdaq Composite gained 1.6% and 2.4% in the ex week, respectively, also reaching all-time highs.

“The advance is built on three main pillars: strong corporate earnings, mountainous stimulus, and vaccine optimism,” Adam Crisafulli of Vital Knowledge said in a note on Sunday. “Stimulus expectations are gad about geting elevated – Biden’s plan may be worth several trillion dollars on paper, but what actually gets passed order probably be much smaller.”

President-elect Joe Biden pledged Friday a hefty economic stimulus rollout, which he hinted will be “in the trillions of dollars.” More details will follow in a formal announcement on Thursday, six days before he is slated to write down office.

The need for further stimulus was underscored by an unexpected job loss in December. The Labor Department reported Friday that nonfarm payrolls floor by 140,000 as new lockdown restrictions hammered virus-sensitive industries, marking the first monthly drop since April.

Federal turmoil should continue this week and it remains to be seen when or if the markets will be affected by it. Democrats with the subsidize of some Republicans are moving toward starting impeachment proceedings in the House of Representatives against President Donald Trump as speedily as this week for inciting the mob attack. The House Rules Committee is expected to expedite impeachment proceedings without body hearings or votes. 

For now the market appears to be looking past it because Congress was able to successfully confirm Biden’s designation win and Democrats now in the Senate majority are likely to pursue another big stimulus. If these events start to delay or derail those stimulus arrangements, traders may start to pay more attention.

Some on Wall Street see a pullback on the horizon for the market especially after a surprisingly pronounced 2020. The S&P 500 gained 16.3% last year.

“After being bullish for several months, we are definitely fashionable more cautious on the stock market up at these levels,” Matt Maley, chief market strategist at Miller Tabak, revealed in a note Sunday. “We believe that the vast majority of the rally from the March lows is behind us…and that a rectification is likely to begin at some point in the first quarter of this year.”

Last week, the benchmark 10-year Exchequer yield broke above 1% for the first time since the pandemic-driven turmoil in March.

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