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Dec 2, 2016

U.S. Stock Market Future Indications by MarketWatch - December 2, 2016: Dow Set to Drop From Record High as Trump-Rally Fizzles



marketwatch.com
 
Sara Sjolin
 
U.S. stocks were on track to wrap up the week in negative territory, as the “Trump trade” that has rallied equity markets in recent weeks showed signs of losing steam.

Investors were also cautious of piling into risky assets, such as stocks, ahead of the Italian constitutional-reform referendum on Sunday, which analysts fear could trigger a new wave of financial jitters in the eurozone.
After closing at a record high on Thursday, futures for the Dow Jones Industrial Average YMZ6, -0.17%  fell 34 points, or 0.2%, to 19,164 on Friday.
Futures for the S&P 500 index ESZ6, -0.30%  dropped 6.60 points, or 0.3%, to 2,185.50, while those for the Nasdaq-100 NQZ6, -0.54%  gave up 25 point, or 0.5%, to 4,711.75.
The Dow average DJIA, +0.36%  was the only of the three major stock averages on track for a weekly gain, albeit a small one. The S&P 500 SPX, -0.35%  fell 0.4% on Thursday, leaving it down 1% for the week so far.
The tech-laden Nasdaq Composite COMP, -1.36%  eyed a potential loss of 3% for the week, after a 1.4% slump on Thursday. The significant international exposure among tech companies is seen as making them more vulnerable to the recent rise in the dollar in the wake of Donald Trump’s win in the U.S. presidential election last month.
More broadly, however, U.S. stocks, Treasury yields and the dollar all got a major boost following the election on expectations the Trump administration will increase infrastructure spending that will result in higher inflation. But analysts say the post-election rally is nearing an end, with investment guru Jeffrey Gundlach saying the Trump trade is “losing steam”.
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The faded Trump rally also weighed on Asian stocks on Friday. European stocks SXXP, -1.11%   were trading sharply lower, too, with investors staying cautious ahead of Italy’s referendum. While the vote is on proposed constitutional reforms, it is generally seen in Italy as a vote of confidence in Prime Minister Matteo Renzi.
If Italian voters reject the proposals — and polls point toward this outcome — analysts fear it would lead to Renzi’s resignation and the dissolution of Italy’s government.
Read: If Italy rejects Renzi’s reforms, then this is how to play stocks, says J.P. Morgan strategist
Economic news: The top-tier nonfarm payrolls data are due at 8:30 a.m. Eastern Time, and are expected to show that 200,000 jobs were added to the U.S. economy in November. The report usually garners lots of investor attention because it’s seen as influencing the Federal Reserve’s decision on interest rates.
However, analysts note that the November data won’t carry the same weight as usual as a rate hike at the Fed’s Dec. 14 meeting is already widely expected.
“Today’s U.S. nonfarm payrolls will certainly be the most insignificant release of the year. The performance of the U.S. jobs market in November should have little, if no impact on the Federal Reserve’s (Fed) plans to hike the interest rate in December,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
“Unless a sizeable disillusion that could imperil the Federal Reserve’s (Fed) plans to hike interest rates in December, any knee-jerk move on the back of the U.S. data should wane rapidly,” she added.
The unemployment rate is forecast to remain at 4.9%, while average hourly are expected to have risen 0.1%.
The ICE dollar index DXY, +0.00%  was down 0.1% at 100.92 ahead of the data.
In other events Friday, Fed Governor Lael Brainard will give welcoming remarks at a financial innovation conference at 8:45 a.m. Eastern, followed by Governor Daniel Tarullo speech’s on financial stability at 12:30 p.m.
Movers and shakers: Shares of Ulta Salon Cosmetics & Fragrance Inc. ULTA, -0.81%  jumped 6.1% in thin premarket trade after the beauty-store chain late Thursday lifted its outlook for the year.
On a more downbeat note, tech majors continued lower on Friday ahead of the bell. Shares of Facebook Inc. FB, -2.80%  dropped 0.8%, Apple Inc. AAPL, -0.93%  fell 0.7% and Google-parent Alphabet Inc. GOOG, -1.34%  lost 0.5%.
Discount retailer Big Lots Inc. BIG, +0.32%  is due to report earnings before the open.
Other markets: Oil prices CLF7, -1.00% LCOG7, -1.08%  dropped almost 1%, taking a breather after sharp gains in the previous two sessions that came after OPEC agreed to cut production.
Gold GCG7, +0.38%  rose 0.4%, while most other metals declined.