Stock futures opened slightly higher Monday evening as the overnight session began.
During the regular trading day, both the S&P 500 and Dow pulled back from the record highs the indexes reached last week. Technology stocks underperformed as the benchmark 10-year Treasury yield crept back above 1.6%, and the Nasdaq fell nearly 1%.
“It’s really been an amazing tug-of-war between growth and value, cyclicals and defensives. Tech has outperformed phenomenally well over the last three to four weeks. But what we’re seeing today is a little bit of a move underneath the surface,” Andrew Smith, Delos Capital Advisors, told Yahoo Finance on Monday.
“While the headline sectors really underperformed from the technology, consumer discretionary perspective, we have looked at industry groups, and we’ve seen tech hardware do well. We’ve seen software services continue to do well,” he added. “And we think that really is an economic function – that the momentum that we’ve seen in the V-shaped reflationary recovery is now set to pull back and wane a bit, and we’re going a little bit more growth-y [and] defensive, in the markets.”
Stocks overall, however, remain near all-time highs and have already rallied 10.8% for the year-to-date, leading other analysts to speculate that sentiment may be running too hot.
“Many of our favorite sentiment gauges are becoming extremely bullish, which could be a near-term contrarian warning,” Ryan Detrick, chief market strategist for LPL Financial said in a note Monday. “The American Association of Individual Investors Sentiment Survey recently showed bulls outnumber bears by the most since January 2018.”
“The 10- and 20-day average put/call ratios from the Chicago Board Options Exchange (CBOE) are above their 95th percentile – suggesting option markets are flashing a good deal of complacency,” he added. “The Bank of America Global Fund Manager survey also showed that portfolio managers are maintaining significant underweights to cash, implying investors are all-in on the ‘risk on’ environment.”
Still, however, a bevy of better-than-expected S&P 500 first-quarter earnings results have, to others, served as justification for stocks’ continued upward trend. Of the about 9% of S&P 500 companies that have so far reported earnings results, 81% have topped already elevated bottom-line estimates. On Tuesday, companies including Johnson & Johnson (JNJ) and Netflix (NFLX) are set to report earnings results.
6:03 p.m. ET Monday: Stock futures pull back from record levels
Here’s where markets were trading as the overnight session began.
S&P 500 futures (ES=F): 4,157.00, up 1.5 point or 0.04%
Dow futures (YM=F): 33,997.00, up 39 points or 0.11%
Nasdaq futures (NQ=F): 13,900.00, up 2.75 points or 0.02%
Pedestrians walk in front of the New York Stock Exchange. (Photo by Michael Nagle/Xinhua via Getty) (Xinhua/Michael Nagle via Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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