U.S. stock futures edged lower early Tuesday as the market appeared set to pull back from February’s blistering hot streak.
Futures contracts tied to the Dow Jones Industrial Average dipped about 60 points. S&P 500 and Nasdaq 100 futures both traded 0.2% lower.
The move in futures comes after the three major indexes set another round of record highs on Monday. The Dow and S&P 500 have now advanced for six straight sessions, while the Nasdaq Composite has finished in the green on five of those six days.
The Russell 2000 led the way on Monday, jumping 2.5% to its own record high. The index has gained nearly 16% year to date.
Investors have been taking more risk and powering the strong rally this month as the Covid vaccine rollout boosted optimism for a smooth reopening in the near future. At the same time, lawmakers in Washington appear to be moving closer to another economic relief bill. House Democrats on Monday unveiled the details of a relief proposal that included $1,400 direct checks with faster phase-outs than previous bills.
“The outlook for stocks continues to get more positive in the near term, plain and simple,” Tom Essaye, founder of Sevens Report, said in a note. “The stock positive formula of Massive (and unwavering) Fed support + Massive new fiscal stimulus + COVID declining and vaccine distribution ramping up is becoming more real, and stocks are rallying as a result.”
Cyclical sectors led the charge in February as investors flocked to areas of the market that would benefit the most from a rebound in economic activities. Energy have rallied 12% this month alone, while financials gained 6.7%.
Given the positive trends in the economic recovery, it would take a major change in the environment to cause anything more than a minor pullback, said Victoria Fernandez, chief market strategist at Crossmark Global Investments.
“To change the narrative, it would have to be something pretty significant,” Fernandez said. “It would have to be something that really changes the expectations about what’s going to happen with the labor market, or what’s happening with vaccines, or the guidance that we’ve been getting from companies on earnings.”
On Tuesday, investors will get more updates on the state of the economic recovery with the NFIB’s small business survey and the Labor Department’s job openings and labor turnover data. DuPont and Goodyear Tire will report their latest earnings before the market opens in New York.