Nasdaq 100 Futures Tumble as U.S. Tech Selloff Set to Resume

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Future contracts on the Nasdaq 100 tumbled on Tuesday, indicating further losses on Wall Street as the market reopens following the Labor Day weekend.

The futures were down 2.3% at 6 a.m. in New York, while contracts on the S&P 500 index were down 0.6%. Tesla Inc. shares slumped in pre-market trading after the electric-vehicle maker missed out on being included in the S&P 500 Index, taking investors who had bet on its entry to the benchmark by surprise.

“Tech companies continue to be sold off today, with concerns about a valuation ‘bubble’ and some profit taking following a strong summer driving market sentiment lower,” ActivTrades analyst Pierre Veyret said. “Also, most investors are likely to stay cautious on stock markets today as U.S.-China tensions continue to simmer with President Trump said to be considering another ban on Chinese cotton.”

In Europe, the Stoxx 600 Index dropped 1%, with a gauge for technology shares falling 2.6%. ASML Holding NV fell 3.8% and Infineon Technologies AG slid 3.4%.

Anxiety has been mounting for investors who have ridden a powerful surge from the depths of the virus panic in March. Magacap U.S. tech companies, at the heart of a rally that has added $7 trillion to their market value, showed signs of buckling at the end of last week amid reports that huge options bets were fanning their gains.

Valuation is emerging as a concern for bulls. At about 26 times annual profits for the S&P 500 and 37 times for the Nasdaq 100, American shares are still trading at the highest multiples in more than a decade, despite last week’s selloff. The Nasdaq 100 lost 3.1% for the week ended Friday, the first weekly drop since July 24.

MARKETS:

  • E-Mini futures on S&P down 0.6%
  • E-Mini futures on Dow Jones little changed
  • E-Mini futures on Nasdaq 2.3% lower
  • VIX Index trading 7.7% higher

ECONOMIC DATA:

  • 15:00 – July Consumer Credit est. $12.929b (prior $8.948b)

POLITICS:

  • President Donald Trump said he intends to curb the U.S. economic relationship with China, contrasting himself with Joe Biden by threatening to punish any American companies that create jobs overseas and to forbid those that do business in China from winning federal contracts.
  • The Trump administration is considering a ban on importing products containing cotton from the Xinjiang region of China in response to Beijing’s alleged repression of the Uighur Muslim minority group, according to two U.S. officials.

ECONOMY:

  • The Senate returns to Washington Tuesday with the Trump administration and Democrats no closer to agreement on a new virus relief package than they were when talks broke off in early August — despite the pressure of the U.S. election in 56 days.

EARNINGS:

  • No major earnings releases scheduled

— With assistance by Vildana Hajric, and Jan-Patrick Barnert

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