Stock futures were little changed Wednesday evening, as investors assessed the regular-session rally and an at least temporary resurgence in technology shares.
The tech stocks pummeled over the past three sessions staged a rebound on Wednesday, leading the broader market higher and the Nasdaq to its best one-day gain since April. However, the index remained lower by 5.4% for September to date.
Amazon (AMZN) shares rose nearly 4% after losing a cumulative 10.8% over the past three sessions, and Tesla (TSLA) shares rose nearly 11% after a record 21% drop on Tuesday.
The rally Wednesday came in absence of any major catalysts, as investors swooped in to purchase shares following the steep declines of the past several sessions. As of its closing price on Tuesday, the Nasdaq had fallen 10% from its recent record high last week, sending it into correction territory.
“Much like there was no real reason for the drop the past three days, there was no main driver for today’s huge rally, other than stocks were quite oversold,” Burt White, chief investment officer for LPL Financial, said in an email Wednesday. “As the election nears, we could see this continued volatility continue.”
In assessing the damage over the past few days, many analysts argued that US equities – and tech and growth shares especially – were due to be knocked from their highs. The roller-coaster trading over the past few days came after trades in tech shares had become increasingly crowded, as investors sought out shares of companies viewed as most resilient during the pandemic. Even with the volatility over the past week, the Nasdaq remained higher by 24% for the year to date, and the S&P 500’s information technology sector was up 27%, outperforming every other major sector.
“Signs of uneasiness and stretched positioning in the options market have been visible in recent weeks, with the put/call ratio collapsing, an extremely steep front-end VIX term structure, and unprecedented volumes of options traded in tech companies, particularly calls,” Alastair Pinder, global equity strategist for HSBC, said in a note Wednesday.
“Indeed, given the unprecedented scale of options traded for the [big-tech] FAANGMs ($200 billion notional volume a day in August, vs. $70 billion at the beginning of January), it is unlikely that the recent volatility has completely cleansed positioning,” he added.
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Here were the main moves in equity markets, as of 6:11 p.m. ET:
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S&P 500 futures (ES=F): 3,400.00, down 0.25 points or 0.01%
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Dow futures (YM=F): 27,970.00, down 2 points or 0.01%
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Nasdaq futures (NQ=F): 11,404.50, up 11.75 points, or 0.1%
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, December 28, 2015. REUTERS/Lucas Jackson TPX IMAGES OF THE DAY
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