US stock index futures were unchanged during overnight trading on Monday after the Dow Jones Industrial Average closed at a record high.
Dow-linked futures contracts fell 4 points. S&P 500 futures were up 0.05% while Nasdaq 100 futures were up 0.08%.
During regular trading, the Dow offset a loss of 160 points and closed 98 points higher. However, the S&P 500 and the Nasdaq were down 0.09% and 0.6%, respectively. The moves came amid the ongoing impact after a hedge fund was forced to liquidate its position in several media stocks.
ViacomCBS and Discovery both slumped on Monday after posting heavy losses last week that prompted Archegos Capital Management to sell large blocks of shares late last week, CNBC and other outlets reported.
Bank stocks also fell on Monday, with Credit Suisse and Nomura posting heavy losses after warning of "significant" losses in first quarter results following the hedge fund sale.
Despite the recent volatility, the Dow and S&P 500 are significantly higher for the month, up 7.2% and 4.2%, respectively.
"The significant tailwind that propels stocks up and the forces that drove stocks into, during, and now out of the pandemic persist," Evercore ISI analysts wrote in a statement to clients.
"Investors seem to understand that faster growth, rising earnings growth expectations, still historically low corporate borrowing costs and pent-up consumer demand will deliver further market gains," the company added.
However, Evercore believes the pace of earnings will slow as stocks are already pricing in an acceleration in growth.
Small cap stocks have been a beneficiary of trading reopening in recent months as investors moved into some of the hardest hit areas of the market. The Russell 2000 is up 43% in the past six months, more than doubling the returns of the Dow and S&P.
Jim Lacamp, senior vice president at Morgan Stanley Wealth Management, believes this deal may now have begun.
"These games, which have really risen from the lows – especially from the lows in September – like small caps and lower quality stocks, will go behind the scenes," he said on CNBC's Closing Bell on Monday.
"The markets are already mentally moving rapidly from the early-stage recovery games to the mid-stage recovery games and this could mean the averages continue to struggle to make new highs," he added.
Traders are preparing for increased volatility during this week with shortened public holidays, with the end of retirement being rebalanced between pension funds and other major investors at the end of the quarter. The recent rapid surge in bond yields could set money managers up for big adjustments in their portfolios.