U.S. equity futures remained flat during trading overnight on Monday after breaking a streak of wins as investors grew concerned about the stock’s pulled valuations.
Dow futures rose 20 points. S&P 500 futures were up 0.07% and Nasdaq 100 futures were up 0.18%.
On Monday, stocks fell as investors assessed high stock valuations amid recent record highs, seemingly ignoring the backdrop of Covid-19 and political turmoil.
On Monday, the Dow Jones Industrial Average lost nearly 90 points, dragged down by a 2.3% drop in Apple shares. The S&P 500 fell 0.66%
The Nasdaq Composite was the relative low performer, down 1.25%, as Facebook, Amazon, Netflix and Alphabet, Google’s parent company, closed lower.
Tesla closed up 7.8% during its first negative day at 12 and the worst day since September 23rd
DoubleLine Capital founder Jeff Gundlach warned Monday of extremely high market valuations relative to historical standards amid the risk of rising inflation.
“At extraordinarily high ratings it’s where we are, and it relies on massive amounts of stimulus,” Gundlach told CNBC’s Scott Wapner in the “Half Hour Report”.
“If you go back four decades of stock market data, there are a lot of valuation metrics that are in the top percentile of overvaluation. So what it’s holding, of course, is the Fed with zero rates and it promises to stay to zero, “Gundlach added. This “allows ratings to be highly record.”
“Historically, when momentum and sentiment indicators are stretched, the market will have to consolidate over a period of time,” said Mark Hackett, head of investment research at Nationwide.
The shares reach a strong earnings week that brought the top three averages to record highs. Major media outlets avoided riots at the U.S. Capitol that prompted House Democrats to file a dismissal article against President Donald Trump on Monday for inciting the attack. The lower house is scheduled to vote on the article sometime this week.
On Monday, those who outperformed the results were the most sensitive to economic growth, such as banks, retailers and some small capitalization. Last week, President-elect Joe Biden promised a deployment of economic stimulus, which he said would be “in the billions of dollars.”
Small capitalization benchmark Russell 2000 lost 0.03% on Monday.
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