The US stock index futures contract was slightly higher early Wednesday morning as the market tried to regain record highs.
Contracts linked to the Dow Jones industrial average gained 71 points. S&P 500 futures and Nasdaq 100 futures are trading in light positive territory.
The move came after the big averages closed lower on Tuesday, giving up early gains that pushed shares to the highest record at the opening clock. Both the Dow and S&P 500 cut three-day winning streaks, each falling 0.22%. The Nasdaq Composite, meanwhile, slipped 0.38%.
The Russell 2000 closed 1.85% lower for its third live negative session.
In Washington, lawmakers continued to disagree on direct payments to Americans. Senate Majority Leader Mitch McConnell has blocked Senate Minority Leader Chuck Schumer from speeding up the bill, which was passed by the House late Monday, which would increase checks to $ 2,000 from $ 600. Stimulus payments could go out as early as Tuesday night , said Finance Minister Steven Mnuchin.
President Donald Trump supports higher payments and said in a tweet on Tuesday that the move should be approved “ASAP. $ 600 IS NOT ENOUGH!”
With just two trading days in the year, the key averages are on track to end 2020 higher. The Dow is up 6.3% for the year, while the S&P 500 is up 15.36%. Despite recent sales pressure, the Russell 2000 is still 17.4% higher for the year.
But the clear annual winner remains the Nasdaq Composite, which has achieved 43%.
“We expect strong economic growth to resurface in 2021 following the winds of the pandemic in 2020 and the trade war between America and China in 2019,” said Brian Demain, portfolio manager at Janus Henderson Investors. “While leadership so far has been – mostly limited to the digital economy”, we are seeing a broader recovery as vaccines are widely implemented and consumers are able to reconnect with the physical economy, “he added.
The number of Covid cases continues to rise. The US now records at least 180,905 new cases and at least 2,210 virus-related deaths each day, based on a seven-day average calculated by CNBC using Johns Hopkins University data. On Tuesday, the US confirmed its first case of the faster-spread coronavirus strain initially discovered in the UK
Some investors believe another potential headwind for equities ahead is the run-up to some of the hottest stocks of the year.
Thomas Peterffy, chairman of interactive brokers, said on Tuesday ‘Squawk Alley’ that a ‘fantastic thing’ has happened in the last few days: his clients are not short for the first time.
“Our customers tend to be on the selling side of options, and there is such a demand for this from the money options that our customers tend to become sellers,” he said. “The Robinhood people are therefore long these options, and Interactive Brokers clients are short these options,” he added. While this is not necessarily a direct bet on the downside, customers are taking advantage of such a large demand on the other hand.
Charles Bobrinskoy, vice chairman of Ariel Investments, reiterated the dangers of a momentum-driven market.
“It can not be that the way to win in investments is just to buy what has gone up over the last few years,” he said on CNBC’s “Closing Bell” on Tuesday. “It works in momentum markets. Momentum markets are great until they turn. But when they turn, it’s ugly,” he said.
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