Stock futures opened near the flat line Tuesday night as investors considered renewed signs of a labor shortage in the economy and a resurgence of social media fueled “meme stocks”.
Little changes were made to contracts on the S&P 500. The index closed Tuesday’s regular session within half a percent of its all-time high, with traders looking for new catalysts to propel the broader market higher. Fears of heightened inflation remained, and concerns of supply-side shortages were further fueled after new data showed job vacancies and voluntary layoffs rose to record highs in April.
“Labor markets are still struggling to get out of first gear in terms of labor supply,” Jonas Prizing, CEO of ManpowerGroup, told Yahoo Finance. “There are childcare concerns, there are still lingering health problems and then there are support mechanisms that clearly allow people to stay at home … I think these three factors will become less important in the months ahead.”
Meanwhile, Meme stocks got another boost on Tuesday, with the social media-powered rally extending to new stocks, including fast food chain Wendy’s (WEN), e-commerce company Wish (WISH) the healthcare company Clover Health (CLOV). AMC Entertainment (AMC) shares, which more than doubled so far in June, closed near the flat line on Tuesday as online retailers headed for new targets.
“It’s a sign that people have a little more free time than they are used to, that cash flow is good and people are very confident,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told Yahoo Finance about interest the meme stocks this month. “Usually in a downturn at this early stage in the recovery, people don’t have the confidence in their jobs and assets to take these kinds of risks.”
GameStop (GME), the original figurehead of the Reddit fueled trading frenzy, will release its first quarter earnings results on Wednesday. The company is expected to post a fourth loss in five quarters, though quarterly revenue is likely to be up year-over-year for the first time in nearly three years.
The story goes on
But as for the broader market, Kleintop added that he believes there is still room for cyclical and value rotation this year, and that certain international stocks may have more upside compared to US stocks in the near future. So far, the cyclical energy sector has outperformed the S&P 500 in June, up 7% for the month to date. And small-cap stocks, which tend to lead during rallies, have outperformed large-caps, with the Russell 2000 up 3.3% while the S&P 500 rose 0.6% by Tuesday’s close is.
“I think you still need to stick with the recovery stocks. I know we have seen a lot more momentum in areas like finance and energy tied to rising inflation, ”he said. “But there are many cyclical companies that don’t. Industrial companies, for example, continue to do very well in this environment. And I think that’s the rotation we’re looking for.”
“I would like to note that Europe has not yet peaked in terms of its growth momentum,” added Kleintop. “The US probably has this quarter here. China did it late last year. So we still have the peak here in terms of growth momentum for Europe coming later this year. I think that’s what you want to focus on.”
6:20 p.m. ET Tuesday: Stock futures trading flat
Here the markets were traded on Tuesday evening:
S&P 500 futures (ES = F): 4,224.5, -1.25 points (-0.03%)
Dow futures (YM = F): 34,581.00, -5 points (-0.01%)
Nasdaq Futures (NQ = F): 13,811.00, -0.5 points, or roughly unchanged
NEW YORK, NY – JUNE 02: Exterior view of the New York Stock Exchange and Wall Street as the new company Organon begins trading next Thursday in New York on June 02, 2021. Organon plans to expand to offer treatments for other conditions that are only applicable to women. About 80% of the new company’s revenues will be generated outside of the US (Photo by Kena Betancur / VIEWpress)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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