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Aug 19, 2019

Dow I U.S. Market I Futures Update: Dow set to jump 300 points as Wall Street continues rebound from August sell-off

Fred Imbert, Silvia Amaro

U.S. stock index futures pointed to a higher open on Monday as Treasury yields rebounded to quell fears of a possible recession. Futures also got a boost after the U.S. agreed to extend a temporary reprieve to Chinese telecom giant Huawei.
Around 7:10 a.m. ET, Dow Jones Industrial Average futures indicated a gain of about 311 points. Futures on the S&P 500 and Nasdaq 100 were also solidly higher.
These gains add to a rebound that started last week after the Dow posted its worst session of 2019. The 30-stock index plummeted 800 points, or 3.1% on Wednesday before regaining some of the lost ground on Thursday and Friday.
The benchmark 10-year Treasury yields jumped to about 1.61% from around 1.54%. Last week the yield fell to its lowest level in more than three years and briefly traded below its 2-year counterpart. This is referred to as an inversion and is seen by traders as a potential signal that a recession may be on the horizon.
President Donald Trump said Sunday he doesn’t see a recession on the horizon in the U.S. after a volatile week for markets.
“I don’t think we’re having a recession,” Trump told reporters. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”
Fears of a recession come as the U.S. and China engage each other in a trade war. Over the past year, the two countries have slapped tariffs on billions of dollars worth of their goods. The U.S. has also targeted Huawei in the trade war, making it more difficult for U.S. companies to do business with the Chinese telecom.
However, The Wall Street Journal and Reuters reported the Commerce Department was preparing to extend a license for 90 days, which will allow Huawei to continue business with the U.S. companies to service existing customers. The current agreement is set to end on Monday.
Shares of chipmakers rose on the reports. On Semiconductor and AMD climbed more than 2% each while Micron Technology gained 1.9% in the premarket. The VanEck Vectors Semiconductor ETF (SMH) advanced 1.4%.
Futures also rose after the Chinese central bank unveiled new measures to further reduce the real interest rate for companies in China in an effort to support slower economic growth.
CNBC’s Spencer Kimball contributed to this report.

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