Stock futures are flat after Monday streak ends

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U.S. equity futures were flat on Monday night after breaking a winning streak as investors worried about strained stock valuations.
Dow futures rose 5 points. S&P 500 futures jumped 0.02% and Nasdaq 100 futures jumped 0.08%.

On Monday, stocks fell as investors assessed the high valuations of stocks amid recent record highs, apparently ignoring the backdrop of Covid-19 and political unrest.

On Monday, the Dow Jones Industrial Average lost nearly 90 points, dragged down by a 2.3% drop in Apple stock. The S&P 500 plunged 0.66%

The Nasdaq Composite was the relative underperformance, falling 1.25% as Facebook, Amazon, Netflix and Google-Parent Alphabet all closed lower.

Tesla closed down 7.8% on its first negative day in 12 and the worst day since September 23

DoubleLine Capital founder Jeff Gundlach on Monday warned against extremely high market valuations by historical standards amid the risk of rising inflation.

“At extraordinarily high valuations, that’s where we’re at, and that’s backed up by massive amounts of stimuli,” Gundlach told CNBC’s Scott Wapner on “Halftime Report”.

“If you go back four decades of stock market data, there are a lot of valuation metrics that are in the first percentile of overvaluation. So what keeps things going, of course, is the Fed with zero rates and promises. to stay at zero, ”Gundlach added. This “allows valuations to reach an all time high.”

“Historically, when momentum and sentiment indicators are this tight, the market must go through a period of consolidation,” said Mark Hackett, chief investment research officer for Nationwide.

Stocks are coming out of a strong week of gains that took the top three averages to record highs. Leading averages ignored the riots on the U.S. Capitol that led House Democrats to introduce an impeachment article on Monday against President Donald Trump for inciting the attack. The lower house plans to vote on the article this week.

Monday’s outperformers were the most sensitive to economic growth, such as banks, retailers and certaub small caps. Last week, President-elect Joe Biden pledged a rollout of economic stimulus, which he said would amount to “trillions of dollars.”

The benchmark Russell 2000 small cap index lost 0.03% on Monday.

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