A trader works on the floor of the New York Stock Exchange (NYSE) in New York on August 5, 2021.
Andrew Kelly | Reuters
Stock futures were mostly trading lower early Monday after the Dow Jones Industrial Average hit a record close on Friday after a stronger-than-expected job report.
Dow-linked futures fell 94 points, or 0.3%. S&P 500 futures lost about 0.15%. Nasdaq 100 futures were up about 0.1%.
Tesla shares rose 1% in early trading after Jefferies upgraded the stock and forecast a rally of more than 20% over the next 12 months.
Berkshire Hathaway B shares rose more than 1% in early trading on a solid earnings report. The conglomerate’s operating income rose 21% year over year to $ 6.69 billion in the second quarter as its myriad businesses from energy to railroad benefited from the economic reopening.
Oil prices fell on Monday building on last week’s losses as rising Covid cases raised concerns about a slowdown in demand. West Texas Intermediate crude oil futures were down more than 4% to trade at $ 65.50 a barrel. The contract traded as low as $ 65.15 earlier in the session. The international benchmark Brent crude oil fell 3.8% to USD 68.01 per barrel.
Movements in futures trading came after the Dow rose 144.26 points, or 0.4%, to hit an all-time high of 35,208.51. The S&P 500 rose 0.17% to hit its own record high of 4,436.52. The Nasdaq Composite bucked the trend and lost 0.4% to 14,835.76. All three major indices ended the week higher, posting their second positive week of three.
The Department of Labor’s employment report on Friday showed that the US economy created 943,000 jobs in July. According to estimates by the Dow Jones, economists expected 845,000 new jobs in the past month. The unemployment rate fell to 5.4% and was thus below the expectation of 5.7%.
“You have seen a lot more jobs have been created in the areas that are reopening – restaurants, hotels, logistics, transportation,” said Larry Adam, Raymond James’ chief investment officer. “That’s a good sign. I think that will give the consumer more purchasing power in the future and I think it’s ultimately a good thing for the economy.”
However, signs of a strong economic recovery could lead the Federal Reserve to withdraw its monetary support measures and prepare to curb its bond-buying program.
“If things continue on this scale, the Fed will likely come in a little earlier when it comes to tapering,” Adam said.
U.S. Senators convened again Sunday to work towards passing a $ 1 trillion infrastructure bill, one of President Joe Biden’s top political priorities. The bipartisan package is expected to have enough Republican support to pass in the Senate this week and enter the House for consideration in September.
The earnings season continues this week, with companies like Tyson Foods, AMC Entertainment, Coinbase, Lordstown Motors, Bumble, Palantir, Disney, Airbnb and DoorDash reporting quarterly earnings.
On Monday, Credit Suisse set a target price of 5000 for the S&P 500 for the end of 2022, citing strong profits. The company kept its target of 4,600 for 2021.
“Over the past five quarters, analysts have significantly underestimated earnings per share, a trend that we expect to continue,” said Jonathan Golub, chief strategist for US equities at Credit Suisse, to his clients. “We see benefits to the estimates as empty shelves are replenished and pricing power is retained. Consumer spending should improve if the unemployment rate continues to fall, accompanied by higher wages. “
Investors are waiting for the key inflation data to be released this week. The consumer price index and the producer price index are to be published on Wednesday and Thursday, respectively.