Dow Jones futures suggest US markets will extend losses on Friday

Dow Jones futures in focus

US equity markets continued to fall on Thursday – led by losses in tech, with the Nasdaq 100 shedding 166 points – finishing out the session more than 1,000 points off its recent high.

The Dow Jones Industrial Average (DJIA) fared a little better during Thursday’s session, dropping just 0.47% or 130 points, to finish out the day at the 27,901 point level. On a more granular level, the best performing DJIA constituents were Walgreens Boots Alliance, Dow and Caterpillar; while the worst performing were Goldman Sachs, Salesforce and Nike.

Looking at what is likely to drive markets in the near-term, IG Market Analyst, Kyle Rodda, argued that ‘Absent the inexplicable and self-perpetuating rise in risk assets, along with a US Fed sticking to the sidelines and playing a small target strategy, there’s little reason for the market to be jumping for joy about what lays ahead in the next few months.’

Mr Rodda finished by saying:

‘The US election is being priced as perhaps the most volatile of its kind in market memory. There’s the real possibility the long-awaited round of US fiscal stimulus won’t be agreed to before the election by US Congress. And to really complicate things, there are mounting signs of another wave of COVID-19 infections in the US and Europe.’

At the time of writing, Dow Jones futures traded down some 77 points or 0.28% (12:00 AM New York time), suggesting the key US benchmark would open lower on Friday, 18 September.

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US tech stocks continue to sell-off

After crossing the 12,000 point mark in early-September, the Nasdaq 100 has sold-off heavily since then, last trading at the 11,080 level.

Looking at how some of the key names in tech have performed over the last five sessions, Facebook has fallen 5.66%, Amazon has dropped 6.23%, Microsoft has dipped 2.11% and Netflix has given up 3.3%. Tesla – seemingly ever-defying the market’s expectations – has actually seen its share price rise in excess of 10% since last Friday – likely in anticipation of the company’s upcoming Battery Day. Tesla’s CEO, Elon Musk, has described this upcoming event as ‘mind blowing’.

Analysts from Morgan Stanley appear comparably optimistic, arguing that 'we expect the event to be potentially narrative changing for Tesla and the battery market' – while also flagging the potential for Tesla to reveal details around a 'cobalt-less battery'.

Morgan Stanley has an Equal-weight rating and $272.00 price target on Tesla.

Of course, this broad sell-off across tech hasn’t seen enthusiasm around the sector wane completely, with many areas of the market still potentially exhibiting signs of ‘irrational exuberance’.

On Wednesday, for example, the much-hyped initial public offering of cloud data storage company Snowflake was launched – with the stock more than doubling during its first day of trade.

While the stock has pulled back from a high of $319.00 per share, at its last traded price of $227.54 per share, it remains significantly above its IPO price.

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