Stock index futures fell in the US on Tuesday, the day after the S&P 500 surged the most in more than a year. Investors were concerned that the almost $1 trillion emergency lending package for European countries will hamper growth.
The sharp rally on Monday was attributed to the $1 trillion emergency bailout package emanating from the EU and IMF to stem the sovereign debt crisis. The bailout fund approved by European leaders in the early hours of Monday drove the S&P 500 to its highest opening jump on record as indexes pushed back into positive territory year-to-date, after last week’s free fall.
The DJIA moved up 3.9% to 10,785. The S&P 500 rose 4.4% to 1,160 while the Nasdaq gained 4.8% to reach 2,375.
Trading volume was higher than the 2010 daily average, though below the frenzied pace of the previous two trading days, which included the unprecedented “flash crash” and traders’ scramble to square their books after certain trades were canceled. On Monday, composite NYSE volume hit 7.1 billion shares, below last week’s peak near 11 billion. Advancing shares beat declining ones by 19 to 1 on the NYSE.
All the sectors in the broad-based S&P 500 posted gains on Monday. Technology and consumer discretionary sectors (each up more than 5%) were among the top gainers, after the Nasdaq entered a technical correction on Friday falling more than 10% from its peak on April 23. Bank shares benefited as the rescue deal opened up short-term lending markets and calmed fears regarding a possible default on Greek debt. The S&P 500 Financial Index moved up 5.6%.
Mortgage backer Fannie Mae (FNM) asked for another $8.4 billion from the Federal Government on Monday, after reporting a sizeable loss in the first quarter. These losses were due to accounting changes and continued weakness in the US housing market.
The CBOE volatility index was just short of 30 at close of market on Monday. This comes after the sell-off last week that sent the Vix above 40.
The US dollar fell against the Euro and the US Dollar Index, which tracks the US currency against a basket of six others, slipped 0.3%. Treasury prices also declined, pushing up the 10-year note’s yield to 3.54%. Crude oil future’s snapped a 4-day losing streak, rising $1.69 to $76.80.
