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Futures pointed to a lower start for equities on Monday, which would mark a pullback from record levels set at the end of last week as investors weigh rising risks around a continued surge in COVID-19 cases and monitor the fallout from a violent mob attack on Capitol Hill.
What are major benchmarks doing?
- Futures on the Dow Jones Industrial Average YM00, -0.68% fell 215 points, or 0.7%, to 30,778.
- S&P 500 futures ES00, -0.54% were down 23 points, or 0.6%, to 3,794.50.
- Nasdaq-100 futures NQ00, -0.49% declined 68.75 points, or 0.5%, to 13,028.50.
Stocks ended last week in rally mode, with the Dow DJIA, +0.18%, S&P 500 SPX, +0.55% and Nasdaq Composite COMP, +1.03% each logging a record close on Friday.
What’s driving the market?
Stocks surged last week, with support attributed to expectations that President-elect Joe Biden’s incoming administration will be able to push another round of aid spending through a Democratic-controlled Congress.
Analysts said worries that stimulus efforts could be slowed by a move to impeach President Trump were a potential damper on sentiment. But others played down the prospect for political turmoil to weigh on the market, arguing that concerns over last week’s uptick in Treasury yields, tied to concerns the Federal Reserve could move later this year to pull back on monetary stimulus, offer the bigger threat to a continued rally.
“Expect markets to continue ignoring the political turmoil in Washington as Democrats, with the support of some Republicans move toward impeachment proceedings against President Donald Trump as soon as today,” said Hussein Sayed, chief market strategist at FXTM, in a note.
“What cannot be ignored is the rise in US government bond yields,” Sayed said, with the 10-year Treasury note yield TMUBMUSD10Y, 1.111% last week logging its largest weekly rise since June. The move in yields could prompt investors to rethink 2021 strategies, “especially if we see a bigger upside move in the weeks and months ahead.”
Yields, which move in the opposite direction of bond prices, edged lower on Monday, but analysts warned the path of least resistance in the near term may be to the upside.
Investors will undoubtedly also pay some heed to a push by Democrats to impeach President Trump, as well as calls by some Republicans for him to step down following his actions surrounding a riot at the U.S. Capitol last week.
House Democrats signaled they could push ahead with plans to impeach Trump this week if Vice President Michael Pence doesn’t move to invoke the 25th amendment and remove him from office for his actions around the riot at the U.S. Capitol last week.
Also, Sen. Pat Toomey of Pennsylvania on Sunday joined fellow Republican Sen. Lisa Murkowski of Alaska in calling for Trump to resign “as soon as possible.”
Which stocks are in focus?
- Twitter Inc. TWTR, -1.62% shares fell more than 6% in premarket trade after the social media company late last week permanently suspended Trump’s account, citing the risk of “further incitement of violence.”
- Shares of Boeing Co. BA, -1.32% were lower after a 737-500 jet disappeared minutes after taking off from Jakarta, Indonesia’s capital, during heavy rain on Saturday. A search has so far discovered plane parts and human remains, but no survivors.
