People walk by the New York Stock Exchange (NYSE) on May 18, 2020 in New York City.
Spencer Platt | Getty Images
U.S. stock futures rose on Sunday night after a sell-off in tech shares led to the market’s first back-to-back weekly declines in months.
The S&P 500 fell by 2.5% last week. It was the broader-market index’s worst one-week drop since June 26. That decline also marked the first time since May that the S&P 500 closed lower in two straight weeks.
Those losses were driven in large part by a steep drop in tech, the best-performing market sector year to date. The S&P 500 tech sector plunged more than 4% for its biggest weekly loss since March. Apple, the biggest U.S. company by market cap, dropped more than 7% last week.
“The excessive Technology froth from August has been wiped away, but in its wake, clear and ominous topping patterns like … developed,” said Frank Cappelleri, executive director at Instinet, in a note.
To be sure, Sean Darby of Jefferies thinks this decline in tech could be short-lived.
“There is nothing untoward about the fundamentals nor earnings expectations. An upside surprise would come from further dollar weakness, while the emergence of a vaccine and/or a rise in long-term rates would curb performance,” said Darby, a global equity strategist at the firm.
Investors are coming into the new week amid dwindling hope of lawmakers striking a deal on new fiscal stimulus.
Senate Majority Leader Mitch McConnell, R-KY, said on Friday the chances of Republicans and Democrats reaching a deal don’t “look that good right now.” Earlier this month, House Speaker Nancy Pelosi, D-Calif., said Democrats and the White House had “serious differences” over coronavirus aid.
Meanwhile, the number of U.S. coronavirus cases are growing by 5% or more in 11 states, according to a CNBC analysis of Johns Hopkins University data. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said last week that recent coronavirus data was “disturbing.”
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