Dow futures bounce 200 points higher after biggest fall in 8 months

U.S. stock-index futures rose Tuesday, signaling an attempted bounce for equities after rising worries over the spread of the delta variant of the coronavirus that causes COVID-19 triggered a selloff that left major benchmarks at nearly one-month lows on Monday.

What are stock-market indexes doing?
  • Futures on the Dow Jones Industrial Average
    rose 220 points, or 0.7%, to 34,048.

  • S&P 500 futures
    were up 23.30 points, or 0.6%, at 4,274.50.

  • Nasdaq-100 futures
    advanced 67.75 points, or 0.5%, to 14,608.50.

On Monday, the Dow
tumbled 725.81 points, or 2.1%, to end at 33,962.04, suffering its biggest one-day loss since October. The S&P 500
dropped 1.6% and the Nasdaq Composite
shed 1.1%, for their biggest declines since May.

What’s driving the market?

Stocks sank Monday in a move largely attributed to fears the spread of the delta variant in Asia in particular would slow down the global economic recovery and possibly lead to renewed restrictions on travel and activity as inflation continues to rise.

Read: Why did the Dow tumble Monday? Economic growth is now a bigger worry than inflation.

“The word ‘stagflation,’ which was a theme in the late 1970s, is being bantered about again: a stagnant economy and inflation, an intractable combination of problems,” said Marshall Gittler, head of investment research at BDSwiss Holding Ltd., in a note.

Worries about the economic growth outlook could limit potential for equities to bounce in the near term, while making life more difficult for economic policy makers with inflation rising in the U.S, analysts said. The Federal Reserve has signaled it’s prepared to begin discussing when it would be appropriate to begin tapering its monthly bond purchases, which would eventually be followed by interest rate increases.

“On the one hand, it will be difficult to keep planning hikes in case the economy is hurt again, while on the other one, you cannot ignore inflation if it continues to skyrocket well above your objective,” said Charalambos Pissouros, head of research at JFD Group, in a note. “ For now, a cocktail of virus concerns and expectations of rate hikes in early 2023 may keep investors morale dented.”

The Tell: Why a bond rally could drive the 10-year Treasury yield lower still, even as inflation expectations become unmoored

Apple Inc.
has pushed back plans for employees to begin a return to the office for workers from early September to October, Bloomberg reported.

Stock-market investors are expected to continue to keep an eye on the Treasurys market, where a rally in long-dated maturities has sent yields sharply lower, amplifying worries about the economic outlook. The yield on the 10-year note
was down 1.9 basis points at 1.168%, after falling Monday to its lowest since mid-February.

See: Bond rally puts a 1% 10-year Treasury yield back in sight

June data on U.S. building permits and housing starts is due at 8:30 a.m. Eastern. Economists surveyed by The Wall Street Journal forecast starts to come in at an annualized rate of 1.59 million, up from 1.57 million in May. Permits are expected to come in unchanged at an annualized rate of 1.68 million.

Which companies are in focus?
  • Shares of International Business Machines Corp.
    were up more than 3% in premarket trade after the company late Monday reported revenue growth for a second consecutive quarter.

  • AMC Entertainment Holdings Inc.
    the world’s largest movie-theater chain, is reopening two of the top-grossing theaters in the Los Angeles area, which have been closed for more than a year. Shares of the popular meme stock were up 0.9%.

  • Shares of Travelers Companies Inc.
    were down slightly after it swung to a second-quarter profit that was well above expectations, fueled by strong growth in investment income and a drop in catastrophe losses.

  • Philip Morris International Inc.
    shares were down slightly after the tobacco company topped earnings forecasts but missed on revenues.

  • Halliburton Co.
    shares rose 2%, after the company reported stronger-than-expected profit for the second quarter

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