Traders on the floor of the New York Stock Exchange, August 17, 2021.
Andrew Kelly | Reuters
Stock futures were unchanged in overnight trading on Tuesday after the Dow Jones Industrial Average fell more than 200 points as investors reassessed growth prospects after a smooth market run this year.
Futures on the Dow were only down 15 points. S&P 500 futures and Nasdaq 100 futures were both barely changed.
The S&P 500 fell 0.3% on Tuesday in relatively thin trade after Labor Day weekend. The blue-chip Dow lost 260 points, weighed down by 3M and Honeywell, while the tech-heavy Nasdaq Composite rose less than 0.1% to hit a record close.
Many investors expect more volatility in September, one of the seasonally weakest months of the year. Price fluctuations could make a comeback, especially if the S&P 500 is up about 20% this year without a single 5% retreat.
"We're seeing a bumpy September-October as the final stages of a mid-cycle transition," said Andrew Sheets, Morgan Stanley's chief cross-asset strategist. "The next two months pose an overwhelming risk to growth, politics and the legislative agenda."
On Wednesday, the Ministry of Labor will publish its closely monitored survey of job vacancies and labor turnover. In the meantime, the Federal Reserve will publish its regular Beige Book poll of activity in its 12 districts.
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One of the catalysts for a sell-off could be the Federal Reserve and its potential to withdraw an unprecedented monetary incentive to support the economy during the pandemic. Fed Chairman Jerome Powell has indicated that the central bank will likely begin pulling back part of its monetary policy before the end of the year, though he sees rate hikes in the distance.
Nevertheless, the prospects for the start are clouded by the coronavirus variant and the latest job report, which showed a great disappointment.
"Stocks have gained much faster than average, with much smaller-than-average setbacks," Keith Lerner, chief marketing strategist at Truist, said in a note. "It would be perfectly normal to see at least one bowel check before the end of the year."