Traders work on the floor of the New York Stock Exchange on July 11, 2024.
Spencer Platt | Getty Images
S&P 500 futures inched up Sunday night after the broad market index suffered its worst weekly losses since April last week as investors rotated out of megacap technology stocks for smaller names.
Futures tied to the broad market index gained around 0.2%. Dow Jones Industrial Average and Nasdaq 100 futures added around 0.1% and 0.3%, respectively.
Traders also kept an eye on the U.S. political landscape after President Joe Biden dropped out of the presidential race on Sunday and endorsed Vice President Kamala Harris as the Democratic nominee. Since Biden’s disastrous debate performance in June, many analysts were seeing an increasing likelihood of a win by former President Donald Trump in November.
Jay Hatfield, CEO at Infrastructure Capital Advisors, said he expects a “muted stock market reaction” to Biden’s resignation from the presidential race, as it had been largely expected as calls for him to bow out grew louder.
“The fact that Biden endorsed Kamala Harris reduces uncertainty. There may be a small unwinding of the Trump trade on Monday as Vice President Harris is perceived to have a slightly better chance of winning,” Hatfield said.
Earnings and central bank policy will also be top of mind. Traders have been pricing in nearly a 93% likelihood of the Federal Reserve cutting interest rates during its September meeting. With this in mind, investors have been selling off the big tech winners of the market rally, in favor of rate-sensitive stocks such as small caps and industrials that stand to benefit from lower rates.
During the previous trading week, the S&P 500 and Nasdaq Composite fell nearly 2% and 3.7%, respectively, marking their biggest weekly losses since April. On the other hand, the Dow advanced 0.7%, while the small cap-focused Russell 2000 gained 1.7%.
On the earnings front, investors will be looking toward Verizon‘s quarterly results Monday morning. No major economic updates are expected until later in the week.