Market sell-off accelerates before the open, with Dow futures that drop 650 points

Market-sell-off-accelerates-before-the-open -Dow-futures-that-drop-650-points

September 21, 2021: -U.S. stock futures began the week deeply in the red as investors continued to move to the sidelines in September between several emerging risks for the market. Futures on the Dow Jones Industrial Average lost 650 points or 1.9%. S&P 500 futures decrease 1.7%. Nasdaq 100 futures came down 1.7%. If the declines hold after the open, the blue-chip Dow is set for its most significant one-day drop since July 19, while the S&P 500 is poised for their worst sell-off since May.

Stocks linked to global growth were less the most in premarket trading Monday. Ford and Carrier Global lost over 3%. General Motors and Boeing had a downfall of about 2% each. Nucor steel shed 2.8%

Energy stocks tumbled as WTI crude oil decreased 2% on concerns about the global economy. Occidental Petroleum, Hess, and Devon Energy were among the losers in premarket trading.

Bond prices are gaining as investors seek safety. The move pushed the 10-year Treasury yield down by four basis points to 1.329%.

Extensive bank stocks took a hit as the rates may crimp profits. Bank of America and JPMorgan Chase were each down above 2% in premarket trading.

“We think the mid-cycle transition ends with the rolling correction which hits the S&P 500,” wrote Mike Wilson, Morgan Stanley’s chief U.S. equity strategist. “We point to downside risk to earnings revisions, consumer confidence, and PMIs.”

Wilson said he believes a “destructive outcome” looks more likely, resulting in a pullback of 20% or more. On Friday, the University of Michigan’s September consumer sentiment index came in at 71, just slightly above the August level that was less in 9 years.

The Cboe Volatility index, Wall Street’s fear gauge, was above the 26 levels on Monday, the highest since May.

Stocks are struggling so far in September in line with historical trends. For the month, the Dow is off 2.2%. The S&P 500 is less by about 2%, and the Nasdaq Composite is down by 1.4%.

On Friday, the Dow Jones Industrial Average turned in three straight weeks of losses for the first time since September 2020. The S&P 500 saw its most significant trading volume Friday since July 19, over doubling its 30-day average volume.

Friday coincided with the expiration of stock options, index options, stock futures, and index futures, a quarterly event known as “quadruple witching.” History is showing volatility tends to pick up around this event.

Fed Chair Jerome Powell will hold a press conference Wednesday after the two-day meeting. Powell said the so-called tapering could occur this year, but investors wait for more specifics, particularly after mixed economic data released since Powell’s in the previous comments.

For some investors, this is just regular market action that can occur in September.

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