Finance News

Inventory futures fall after the Wall Road sell-off

Stock futures fell during overnight trading, building on Wednesday's heavy losses, which saw the S&P 500 fall more than 2%.

Futures contracts linked to the Dow Jones Industrial Average were down 0.15%, indicating slight losses on Thursday's open. S&P 500 futures fell 0.23% while Nasdaq 100 futures fell 0.42%.

The futures initially opened in the green on Wednesday night, but President Donald Trump's comments that he would not commit to a peaceful transfer of power should he lose the election seemed to dampen sentiment.

Stocks continued their swoon in September during Wednesday's regular trading hours, with all major averages posting heavy losses. The Dow Jones Industrial Average closed 525.05 points, or 1.9%, lower, reversing a 176-point gain from the earlier time of the session. The S&P 500 was down 2.4% while the Nasdaq Composite was down 3%.

"There was no specific reason to explain the sale and in many ways the slump was a continuation of price moves that had been going on since the beginning of the month," said Adam Crisafulli of Vital Knowledge. He noted that the tech trade that broke in early September has not yet recovered. "The psychology in the group has changed and is no longer the steadfast source of support it once was. Meanwhile, investors are still not satisfied enough with the cyclical / valuable stocks to make up for ongoing technical weakness," he added.

So far in September, the S&P 500 is down 7.5% while the Dow is down 5.8%. The Nasdaq Composite was the relative outperformer, down 9.7% as investors exited big tech. Facebook, Amazon, Apple, Netflix, Alphabet, and Microsoft all fell at least 11% in September.

Looking ahead to Thursday, investors will get an overview of the state of the economic recovery when US jobless claims are released at 8:30 a.m. ET. Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will also appear before the Senate Banking Committee.

The testimony comes as Washington seeks to push additional incentive measures. On Wednesday, Chairman Powell reiterated that further fiscal stimulus is needed to continue the US economic recovery.

"Today's stock market action on Wednesday is a clear signal that investors are demanding more fiscal or monetary stimulus," said Andrew Smith, chief investment strategist at Delos Capital Advisors. "While most investors are clinging to recent volatility due to seasonality and political uncertainty, we have entered a phase where there is a pocket of liquidity that has caused the US dollar to rally and hurt risk-weighted assets."

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