US stock index futures started trading in the red after Friday's big gain. Dow futures fell 124 points or 0.4%, S&P 500 by 0.4%, and Nasdaq 100 futures lost 0.5%.
The decline was mainly due to the shares of technology companies, which are suffering from rising treasury bond yields. Investors were also closely watching the returns. After a sharp jump at the end of September, the 10-year Treasury bond yields about 1.49%.
It is unlikely that we will see a major jump in the US market back to the highs of this year in the near future, as we need to understand that nervousness about the actions of the Federal Reserve System and related decisions regarding monetary policy closer to the winter of this year, as well as problems in supply chains, along with the likelihood of tax increases, restrain market enthusiasm. Indeed, some rebalancing and profit-taking had already taken place in the market last week, and many bears, along with overly nervous investors, now make up a smaller part of market activity, which will positively impact the index. It is also interesting that the problems associated with COVID-19 are of less interest to investors after the huge vaccination program conducted by the governments of various countries in the spring and summer of this year.
The market recovery observed on Friday is also because the 4th quarter, as a rule, is a reasonable period for companies and their reports, which will undoubtedly push the indices up. However, the central bank's expectation of tightening its policy and the problems with the debt ceiling, which have not been resolved, but only postponed until December, will have a sobering and restraining effect.
Friday's report on the US labor market will also play an important role this week, which may push the Federal Reserve System to make more concrete decisions about when to start reducing its bond-buying program. Economists expect about 475,000 jobs to be created in September, while August was not very successful. Only 235,000 jobs have been created in the economy.
As for today's premarket, I suggest a quick run through those companies that showed the biggest movements.
Everyone's favorite Tesla jumped 3.0% on the premarket. after the company announced deliveries of 241,300 vehicles in the third quarter, which is the highest figure for the quarter. It is also 73% more than in the same quarter of 2020.
The decline of several companies in the pharmaceutical sector continues. Shares of Moderna and Novavax are under pressure again today, as both manufacturers of COVID-19 vaccines lost double-digit percentages on Friday. Moreover, the reason for everything is the successful trials of Merck's new antiviral pill. Shares of Moderna in the premarket fell by 4%, and Novavax shares fell by 3.3%. But Merck shares, on the contrary, rose by another 2.7% in the premarket after rising by 8.4% on Friday.
As for the technical picture of the S&P 500, the large support level of 4,288, which I spoke about last week, entirely played itself out, which allowed buyers to regain some of their positions. Their main task is to break through and consolidate above the resistance of 4,394, which will allow the market to increase positions very quickly until it returns to 4,478. However, we should expect market problems at the level of 4,394. Unsuccessful consolidation in this range will return sellers who will try to reach a minimum of 4,288 again.