US stock index futures were modestly higher during Monday's overnight trading after the S&P 500 ended in the green and had a five-day losing streak.
Futures contracts linked to the Dow Jones Industrial Average rose 75 points. S&P 500 futures gained 0.2% while Nasdaq 100 futures gained 0.13%.
The Dow and S&P rose for the first time in six sessions during regular trading as investors bet that some of the recent sales looked exaggerated. The Dow gained about 260 points, or 0.76%, after rising nearly 1% at one point during the session. The S&P gained 0.23%.
However, the Nasdaq Composite bucked the trend, down 0.07% for its fourth consecutive negative session. The tech-heavy index is on its longest daily losing streak since mid-July.
Eight out of eleven sectors finished in the green, led by energy stocks that skyrocketed on rising oil prices.
Economic reopening-related stocks – including airlines and cruise lines – also rose after the seven-day daily U.S. Covid case average fell to around 144,300, up from about 167,600 cases per day at the beginning of the month.
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"In the short term, we expect increased volatility in the equity markets, although long-term investors should use pullbacks to add equity exposure," said Richard Saperstein, chief investment officer at Treasury Partners. “The next six weeks tend to be seasonally weak for stocks, which is an additional concern for a stock market already facing elevated valuations and a lack of short-term upside catalysts,” he added.
Closely watched inflation data will be released on Tuesday, when the consumer price index for August is released. Economists estimate that consumer prices rose 0.4% a month in August and 5.4% year-on-year, according to estimates by Dow Jones. Printing comes after producer prices rose 8.3% year over year in August, the largest annual increase since records were first recorded in November 2010.
The National Federation of Independent Business will also release its latest poll on Tuesday, which will give investors insight into small business development.
In Washington, the House of Representatives Democrats proposed new tax increases to pay for the $ 3.5 trillion spending package. A summary by the Ways and Means Committee showed that the plan provides top tax rates of 26.5% and 39.6% for businesses and individuals, respectively.
The major averages were all down at least 1% in September, and RBC sees no increase in the S&P 500 through year-end. The company raised its year-end target for the benchmark index to 4,500 on Monday, up from an earlier target of 4,325. The new target is less than 1% above the index's closing price on Monday. The company has also set a year-end 2022 target of 4,900.
"We continue to expect the S&P 500 to experience a spell of volatility / significant pullback before year end, a call we have made over the past few months due to increased stock market sentiment and positioning," the company wrote in a note to the customers.
"While we take the reasons for a pullback seriously, we also consider the risks of an economic recession to be minor, reducing the likelihood of a full growth scare, and intend to view this as a buying opportunity," added RBC.
The Federal Reserve will begin a two-day monetary policy meeting on September 21.
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