U.S. Stock-Index Futures Drop; Volatility Keeps Traders on Edge

(Bloomberg) -- U.S. stock-index futures traded lower as investors assessed the prospects of a stimulus bill, a potentially bumpy transition of power in the White House and the advance of a large-scale coronavirus vaccine study.

December contracts on the S&P 500 were down 0.2% at 12:38 p.m. in London, after rising as much as 0.5%. Futures rose 0.7% on the Dow Jones Industrial Average, while those on the Nasdaq 100% declined 1.6%. The Cboe Volatility Index, which moves in the opposite direction of the equity benchmark about 80% of the time, increased Monday for the first time this month.

“Markets are on edge after the volatility seen overnight, so it is not taking much volume-wise to move the index futures around,” said Jeffrey Halley, a senior market analyst with Oanda Asia Pacific Pte.

Markets remain in a bullish mood following news that a shot being developed by Pfizer Inc. and BioNTech SE delivered promising results in a trial. Still, overnight moves left a mark at a sector level as stocks more exposed to an economic rebound, such as financials and industrials, surged while their more defensive peers, like technology and staples, retreated.

In Europe, the Stoxx 600 index was also volatile, rising as much as 0.8% after dropping as much as 0.3%. Banking shares led gains among sectors, while technology stocks dropped the most.

The S&P 500 touched an intraday record on Monday but pared its gains by the close as Senate Majority Leader Mitch McConnell said Congress should pass only a limited stimulus bill before the end of 2020. Meanwhile, the Federal Reserve warned that asset prices in key markets could take a hit if the pandemic’s economic impact worsens in coming months.

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