Stock futures rose on Monday evening, indicating Wall Street would open higher at Tuesday's opening bell, following a volatile session sparked by the sudden unwinding of a hedge fund run by a marquee investor.
A choppy session in which traders were watching several big stocks like Viacom (VIA) and Discovery (DISC) resulted in the Dow notching a new record close, but tech stocks and the broader market slipped. Several big name stocks took a hit after Bill Hwang, a fund manager and the ex-head of Tiger Management's family office, was confronted by a margin call that forced the liquidation of billions in stock holdings.
Bloomberg News reported that Hwang's firm, Archegos Capital Management, was forced by its banks to sell more than $20 billion worth of shares after some positions moved against him. In a related move, Swiss banking giant Credit Suisse (CS) warned that the volatility stemming from the firm's liquidation would force the bank to take a "highly significant" hit to its first quarter results.
In spite of contagion fears stemming from Archegos' margin call, however, the Dow crept to a fresh closing high. The week will be mostly quiet until Friday, when the March jobs report is released. The data are expected to show the economy created a whopping 630,00 jobs — the most since October 2019 and the best the onset of the COVID-19 pandemic.
The past couple weeks have been marked by choppy equity trading, especially heading into some of the final sessions of the first quarter. But overall, the cyclical energy, financials and industrials sectors – or the biggest under-performers of 2020 – have outperformed strongly for the year-to-date, while last year's leading technology companies have lagged. Signs of improving economic growth have trickled in, with Thursday's bigger-than-expected drop in new unemployment claims to a pandemic-era low among the latest positive reports.
A prevailing concern for many investors, however, has in fact been centered on the pace of economic expansion, and whether the stimulus-aided post-pandemic recovery might barrel forward even more vigorously than expected and stir up rapid inflation. In the wake of passing a $2 trillion stimulus package, the Biden administration is gearing up for even more spending — and the likelihood of higher taxes.
"You can be sure the spending with have a multiplier less than zero and tax increases are always an economic drag with the extent the only difference," noted Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group.
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6 p.m. ET: Stocks rise after choppy session
Here's where markets were trading on Monday evening:
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S&P 500 futures (ES=F): 3966.75, +7.75
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Dow futures (YM=F): 33086, +54
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Nasdaq futures (NQ=F): 12977.00, +32.50
March 27, 2021 at 06:52PM
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