Stock Index Futures Pull Back Ahead of Monday’s Open

Stocks ended last week on a high note, with the S&P 500 and the Dow Jones Industrial Average both setting fresh all-time highs. The S&P 500 is now hovering at 4,468 while the Dow is now above 35,515. For its part, the Dow was buoyed by gains in Disney, which rallied on the heels of its quarterly earnings results. The Nasdaq also climbed higher.

Investors pushed stocks into record territory despite data that reveals consumer sentiment is dropping. According to the University of Michigan’s preliminary data, the consumer sentiment index fell to 70.2 in August, its weakest point in about a decade and down from a reading of higher than 81 last month. Wells Fargo economists described the results as “disastrous.” Economists are blaming the rise of the delta variant for the dampened mood.

So far, investors have managed to see the glass half full thanks to largely better than expected second-quarter earnings out of corporate America. While valuations are lofty, Yardeni Research President Ed Yardeni on CNBC likened the current environment to that of the “roaring twenties on Wall Street,” suggesting that investors “buy a little bit of everything.” 

On Sunday evening, stock index futures are retreating across the board amid global unrest as Afghanistan falls to the Taliban. The U.S. Afghan embassy has since been relocated.

Stocks to Watch

• SoFi Technologies sank 14% on Friday after the fintech company reported a wider-than-expected Q2 loss despite a doubling of net revenue. A lockup period on the stock for select shareholders is reportedly coming to a close in the coming days, which could have pressured the stock. SoFi has been bolstering its crypto trading offering.
• ContextLogic, which runs the e-commerce platform Wish, tumbled nearly 20% on Friday. Wish is being hit by a one-two punch weaker demand and rising costs.

Look Ahead

Earnings season is winding down with just over 10% of companies in the S&P 500 still waiting to report their results. Separately, the bitcoin price is perched above the USD 47K level once again, so investors might want to keep an eye on the cryptocurrency.

On Tuesday, retail sales for the month of July will be released.  Wells Fargo economists are predicting a slowdown in sales growth, not least due to the delta variant, which has thrown a wrench into plans for the economy to reopen more fully.

Meanwhile, industrial production and housing starts for July come out on Tuesday and Thursday, respectively.