S&P, Nasdaq, Dow Jones futures tick up after selloff with summer rally struggling

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Stock index futures point to a slight gain at the open Tuesday following the worst session for stocks since June.

The mood still looks risk-off with the Fed’s Jackson Hole meeting in view and investors wondering if the end of a bear-market rally has come.

S&P futures (SPX), Nasdaq 100 futures (NDX:IND) and Dow futures (INDU) are up 0.2%.

Equities have faced pressure since the S&P was rebuffed at its 200-day moving average last week (the 200-day now stands at about 4,318).

“Right now the only sectors that have been able to maintain gains over their respective 200-day moving averages are energy and defensive stocks (utilities, consumer staples, etc.),” Guggenheim wrote last week. “More growth-oriented sectors have led the rebound since June but remain below that key technical threshold, indicating that more problems could lie ahead for growth stocks if the rally is not sustained.”

A strong dollar has also put pressure on outperforming growth stock sectors that have been the core of the recent rally.

“The dollar wrecking ball continued to demolish all in its path yesterday, with markets starting the week in a decidedly risk-off manner,” Caxton’s Michael Brown said.

The 10-year Treasury yield (US10Y) is down 1 basis point to 3.02% and the 2-year yield is down 1 basis point to 3.33%. The market is now pricing in a 60% chance the Fed hikes by 75 basis points next month.

The economic calendar is light again this morning. New home sales for July arrive shortly after the start of trading. Economists expect a drop to an annual rate of 575K.

“The housing market has been hit by tighter policy, policy error, and reduced household cashflow,” UBS chief economist Paul Donovan said. “If slowing home sales mean increased rents, it may increase the fictitious owners’ equivalent rent price which raises inflation (but not the cost of living).”

Among active stocks, Zoom is sliding on concerns about challenging outlook.

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