Dow Jones Futures: Bear Market, Trump Government Shutdown, Fed Chairman Powell In Focus

Dow Jones futures rose modestly Sunday night, along with S&P 500 futures and Nasdaq futures, amid a U.S. government shutdown and concerns about Fed Chairman Jerome Powell. The Dow Jones and other indexes suffered huge losses last week, extending the stock market correction and Nasdaq entering a bear market. On Friday, Apple stock fell 3.9%, Facebook stock 6.3%, Amazon stock 5.7%, Netflix stock 5.45% and Google parent Alphabet (GOOGL) 3.2%. A government shutdown is set to last past Christmas. Meanwhile, Trump officials sought to reassure markets that President Donald Trump won’t fire Fed Chairman Powell following the latest Fed rate hike.


Stock Market Correction Shifts To Bear Market

The Dow Jones fell 6.9% last week and the S&P 500 index 7.1%, their worst losses in years as both indexes’ corrections exceed 15%. The Nasdaq composite plunged 8.4%. The tech-heavy Nasdaq is now 22% off its all-time high, crossing over from a stock market correction to a bear market.

Apple (AAPL) is 35% from its peak, at a 10-month low. Facebook (FB) 42%, slamming to 23-month lows. Amazon (AMZN) is 32% off its best levels and now at an 8-month low. Netflix (NFLX) is 41% off its peak at a 10-month low. Google stock is 23% below its peak but at a 14-month low.

Microsoft (MSFT), which is still the most valuable company at $754 billion, ahead of Apple stock, Google stock and Amazon stock, lost 7.3% last week to its worst level in nearly six months.

Trump Government Shutdown

A partial U.S. government shutdown began Saturday with no signs of a near-term resolution. President Trump is demanding funding for a border wall. The House approved government funding with $5 billion for a border wall, but it stands no chance to get 60 votes in the Senate. The Senate has adjourned until Thursday, Dec. 27. On Jan. 3, the new Congress is sworn in and Democrats take control of the House.

White House Budget Director Mick Mulvaney, who’s also incoming acting White House chief of staff, told Fox News Sunday that the U.S. government shutdown could last “into the new Congress.”

Trump Mulls Firing Fed Chairman Powell?

Trump discussed firing Fed Chairman Powell after Wednesday’s Fed rate hike spurred a stock market sell-off, according to Bloomberg. However, Treasury Secretary Steven Mnuchin said in a Saturday statement that Trump denied considering Powell’s ouster and that the president didn’t believe he had the legal right to do so.

Mulvaney gave a somewhat different take Sunday. He told CNN that President Trump “now realizes” he “does not have the ability” to fire Fed Chairman Powell.

Trump has been increasingly vocal about his dissatisfaction with Powell and the string of Fed rate hikes. Fed Chairman Powell has few fans on Wall Street right now. But analysts generally agree that President Trump firing the Federal Reserve chief could trigger a very negative stock market reaction.

Mnuchin Calls Top Bankers

Mnuchin called top executives from the six biggest U.S. banks this weekend, he tweeted Sunday. The Treasury, in a statement attached to the tweet, stated the the “CEOs confirmed that they have ample liquidity.” Mnuchin on Monday will call a meeting of the President’s Working Group on financial markets. He chairs that group, with also includes representatives of the Fed, SEC and Commodity Futures Trading Commission.

Some analysts and investors wondered if Mnuchin, while trying to calm markets, was raising concerns by answering a question no one was asking.

Dow Jones Futures Today

Dow Jones futures were 0.4% above fair value. S&P 500 futures rose 0.4%. Nasdaq 100 futures climbed 0.4% above fair value. Dow Jones futures have been volatile Sunday, reversing fair-value losses of 0.5%. Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session.

One could argue that the stock market is “due” for a bounce. Market fear gauges are hitting levels typically associated with a short-term bottom. Friday’s selling, especially in big-cap techs such as the FANGs and Apple stock, had a capitulation feel. But even if Apple stock or the major averages bounce for a day or two, that wouldn’t end the stock market correction.

Stock Market Holiday Half-Day Session

Monday’s Christmas Eve stock market session closes at 10 a.m. ET. Expect light trading as people travel or do last-minute shopping. There are no earnings reports on tap this week. The U.S. government shutdown likely will delay scheduled economic reports from federal agencies.

Holiday shopping appears to be meeting or beating expectations, according to various measures. After Christmas, expect Amazon to announce record holiday sales, which won’t really tell investors much.

So Wall Street, in the midst of a stock market correction or bear market to wind down the year, will likely focus on the government shutdown, the possible fate of Fed Chairman Powell and any new China trade war developments. In other words, all eyes will remain on Trump.


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Originally posted 2019-09-19 23:29:00.


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