Stock futures were mixed in the early hours of Monday morning as investors reeled from severe losses garnered last week.
The Dow Jones Industrial Average (DJIA) futures were essentially flat at 0.01% as of 5:20 a.m. EST, Monday. Meanwhile, futures on the S&P 500 (SPX) lost 0.16%, whereas those on the Nasdaq 100 (NDX) slipped 0.32%.
The movements came after the indexes ended the bad week in green, in what is believed to be a relief rally driven by investors hoping that the market has hit the bottom.
On Friday, the Dow ended the regular trading session 1.47% higher, while the S&P 500 jumped 2.39%. Meanwhile, the Nasdaq 100 advanced 3.7%.
Although it is still doubtful if the market is indeed bottoming out, there might be another reason for Friday’s rally. With the stock market at dangerous lows, traders were initially pulling out from equities in fear of inflation and a possible recession. However, the typical ‘safe havens’ for investments are also facing repercussions from general pessimism. Real estate has become unattainable due to increasing home prices and mortgage rates, and gold has also lost significant value in the past few weeks.
Basically, investors are finding no safe place to hide their cash from the tumult. It appears that many are holding onto, and even buying more shares of equities in hopes that they will be rewarded when the carnage subsides.
The Federal Reserve has only had two rounds of rate hikes and is expected to make more aggressive hikes this year, possibly without heeding the risk of recession. This means that demand could retract in the near-term, making the rally experienced on Friday unsustainable.
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