S&P 500 futures bounce after index posts worst day in nearly two years: Live updates

 S&P 500 futures

 bounced in overnight trading after the broad index notched its worst day in nearly two years as global markets sold off.

Futures tied to the S&P 500 rose 0.9%, while Nasdaq 100 futures

 rallied 1.2%. Futures connected to the Dow Jones Industrial Average

 jumped 230 points, or 0.6%.

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The overnight moves follow a sharp sell-off during regular trading. The 30-stock Dow

 dropped 1,033.99 points, or 2.6%, while the S&P 500

 slid 3%. Both indexes notched their worst sessions since September 2022. The Nasdaq Composite

 shed 3.43%, and 15% off its closing high.

A weak July jobs report Friday sparked concerns that the Federal Reserve is behind the curve on rates cuts, fueling fears of a recession.

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These fears spilled over into global markets, with Japan’s Nikkei 225 index registering its worst daily decline since Black Monday in 1987. U.S. Treasury yields declined as investors flocked to safe-haven bonds. The Cboe Volatility Index

 at one point surged to 65, its highest level since 2020.

The Dow, S&P 500 and Nasdaq are down 5%, 6% and 8% respectively in three days, their worst 3-day performance in more than two years.

A major unwind in the yen “carry trade” also contributed to the volatility. The Bank of Japan last week raised interest rates, contributing to a rise in the yen. That’s affected the practice of traders borrowing in the cheaper currency to purchase other global assets.

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After such a strong rally since last fall, valuations, sentiment, and investor positioning had become stretched,” said Quincy Krosby, LPL Financial’s chief global strategist. “What markets are experiencing today is an unwinding of that bullish positioning, which is particularly evident in the yen and the so-called carry trade.”

Artificial intelligence stocks bore the brunt of Monday’s spiral, with Nvidia

 and Apple

 dropping about 6% and nearly 5%, respectively. Both stocks bounced in after-hours trading. The VanEck Semiconductor ETF (SMH)

 fell 2% while megacaps Alphabet, Amazon and Tesla dropped more than 4%. All three stocks rose about 1% in overnight trading Traders have been worried as of late as to when megacap tech companies’ investments in AI will pay off.

Many investors have come to view Monday’s sell-off as long overdue in a market that’s reached high valuations and new records, with some cautioning that the pain may have more room to run.

“It’s too early to say the low is in,” wrote Keith Lerner, Truist’s co-chief investment officer. “There has been damage done, and the repair process will likely take time. However, the risk/reward appears to be gradually improving as the market’s bar for positive surprises resets lower.”

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In other news, Palantir Technologies

 surged 13% in after-hours trading on strong quarterly results and a guidance lift, while Lucid Group rallied 6% on better-than-expected revenue in the second quarter.

25 Min Ago

Fed’s Daly sees rate cuts on the way

San Francisco Federal Reserve President Mary Daly indicated Monday that interest rate reductions are coming later this year, though she did not provide specifics.

“Policy adjustments will be necessary in the coming quarter. How much that needs to be done and when it needs to take place, I think that’s going to depend a lot on the incoming information,” the central bank official said during a forum in Hawaii.

Daly noted that she still thinks the economy is growing, though the labor market is weakening and less restrictive policy will be appropriate.

“I see an economy that has momentum, and we want to make sure we keep that,” she said.

—Jeff Cox

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