U.S. stock futures point to a Christmas Eve bounce for battered equities

U.S. stock futures point to a Christmas Eve bounce for battered equities

Treasury Secretary Mnuchin conducted calls with major banks over the weekend

U.S. stock futures rose Monday, indicating markets could bounce in a holiday-shortened session after the worst week of trading since the financial crisis of 2008.

How are benchmarks performing?

Dow Jones Industrial Average futures YMH9, +0.38% rose 125 points, or 0.6%, to 22,533, while S&P 500 futures ESH9, +0.53%  gained 15 points, or 0.6%, to 2,429.25. Nasdaq-100 NQH9, +0.77%  futures rose 38.75 points, or 0.6%, to 6,102.

On Friday, the Dow Jones Industrial Averages DJIA, -1.81% fell 414.23 points, or 1.8%, to 22,445.37, while the S&P 500 index SPX, -2.06% fell 50.84 points, or 2.1%, to 2,416.58. The Nasdaq Composite Index COMP, -2.99% COMP, -2.99% traded down 195.41 points, or 3%, to 6,332.99.

The Nasdaq officially entered bear market territory Friday, down 21.9% from its Aug. 31 highs. That’s as the S&P and the Dow inch closer to bear market territory, with the S&P off 17.5% from its Sept. 20 highs, and the Dow down 16.3% from an Oct. 3 high.

The weekly performances for the Dow — off 6.9% — and the Nasdaq — down 8.4% — were the worst since 2008. The S&P fell 7.1% for its worst weekly showing since 2011. Friday’s volumes were the heaviest since August 2011.

What’s driving the market?

Equity and bond markets will finish early to mark Christmas Eve and will be closed on Tuesday for the Christmas holiday. The rest of the week will see normal trading hours. However, with many traders out for the holidays, volumes are expected to be thinner and move could be exaggerated.

Monday’s potential bounce came as China’s Ministry of Commerce said “new progress” had been reached in “vice-ministerial-level” trade discussions with the U.S. in a teleconference Friday, the South China Morning Post reported on Sunday.

Stock futures rebounded from lower levels seen after the Treasury Department tweeted Sunday that Secretary Steven Mnuchin had spoken with the CEOs of the country’s six biggest banks — Bank of America BAC, +0.56% , Citi C, +0.16% , Goldman Sachs GS, +0.28% , JPMorgan Chase JPM, -2.36% , Morgan Stanley MS, -3.16% and Wells Fargo WFC, -2.00% —to ensure they had ample liquidity in case stock should resume selling off on Monday.

Mnuchin will also hold a call Monday with the President’s Working Group on financial markets “to discuss coordination efforts to assure normal market operations.” The Treasury chief is on vacation in Cabo San Lucas, Mexico.

Meanwhile, White House advisors over the weekend tried to ease investor concerns that President Donald Trump could fire Federal Reserve Chairman Jerome Powell amid anger over the Fed’s recent interest-rate hike that spurred more market losses. Mick Mulvaney, the president’s incoming chief of staff, told ABC’s “This Week” on Sunday that Trump “now realizes” he cannot remove Powell, while Mnuchin stated Saturday that the president had not suggested firing Powell.

Friday saw another day of extreme volatility on Wall Street, as investors digested the implications of an impending government shutdown, tighter U.S. monetary policy, flagging global growth and uncertainty surrounding U.S.-China trade relations.

How are other markets trading?

Asian stocks had a mixed session, with China’s Shanghai CompositeSHCOMP, +0.43%   modestly higher, while the Nikkei NIK, -1.11% was closed for a holiday. European stocks SXXP, -0.43% pointed to a weaker start.

The ICE Dollar Index DXY, -0.15% was down 0.2% to 96.78, while goldGCG9, +0.43% rose 0.6% to $1,265.40 an ounce. February West Texas Intermediate crude CLG9, -0.20% rose 0.3% to $45.77 a barrel.

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