US Stock Market: Futures Near Weekly Low After DJIA Crashed 700 Pts; Nasdaq, S&P 500 Falls Too; What's Ahead

US stock futures are near their weekly lows on August 21, after indices at Wall Street crashed significantly. Yesterday, the Dow Jones dropped by over 700 points, while the Nasdaq Composite tumbled by 264 points and S&P 500 recorded a 67-point decline. The treasury yields have rebounded, and oil prices remain elevated, which continues to ignite fear among investors over inflationary pressures and rate hike scenarios. Walmart reported its quarterly earnings, where it recorded weak US sales that pushed its shares down by 10%. Additionally, Alibaba also dragged the benchmarks after its own quarterly results.

US Stock Futures

The Dow Jones futures traded around 52,882.00, up by 0.06%. While the Nasdaq 100 futures surged 0.21% to trade around 29,360 and S&P 500 futures gained marginally to trade around 7,669.25, at the time of writing. Despite the uptrend, US stock futures are near their weekly lows.

US stock futures hovered near weekly lows on Friday after major averages faced heavy selling pressure in the previous session, as Treasury yields rebounded amid concerns that the government's plan to lower borrowing costs may offer only a temporary solution. Rising oil prices, as the US and Iran remain deadlocked over the Strait of Hormuz, also stoked inflation concerns, as per Trading Economics report.

Dow Jones + Nasdaq + S&P 500

The Dow Jones Industrial Average or DJIA took a massive hit on August 20th, crashing by 703.84 points or 1.32% to end at 52,759.21. This is due to extreme selling pressure in Walmart which crashed by 10% to close around $103.84.

Walmart beats street expectations on several verticals, however, its US sales came in slowest in over six years. The company report 2.6% growth in US sales, down from 4.1% in the last quarter, which was below expectations. The world's largest retailer reported 5.9% growth in revenue with e-commerce sales rising by 23%.

Alibaba shares also plunged 5% despite reporting 45% growth rate in revenue, which was fastest in 22 quarters. But that was not the problem for investors to turn extremely bearish. It was Alibaba's net profit which nosedived by 75% as capital expenditure skyrocketed by 75% to RMB67.68 billion.

As per Charles Schwab report, disappointing earnings from Walmart (WMT) and higher oil prices also weighed on stocks. Walmart reported the slowest quarterly sales growth in more than six years this morning, pushing its shares down more than 6% and heightening the focus on retailers in what so far has been a mixed reporting season for the group.

Other stocks that dragged Dow Jones include Boeing (-3.20%), Home Depot (-2.85%), American Express (-2.57%), John & Johnson (-2.21%), Amazon (-2.16%), Merck (-2.11%) and Nike (-2.05%).

Coming to other indices on Wall Street, they too faced selloffs. The tech-heavy index, Nasdaq declined by 263.92 points or 1% to close at 26,067.17. Tech and chip-related stocks were broadly in red with SpaceX down by 4% and Tesla lower by 2%.

One of the major reasons for bears in Wall Street is the sharp rebound in treasury yields. Both the 10-year and 30-year US treasury yields surged to 4.7% and 5.25%.

Longer-dated Treasury yields have surged since July amid increased debt issuance by AI companies and rising federal deficit spending. Meanwhile, higher oil prices as the US prepares sweeping new economic sanctions against Iran also added to inflation concerns, as per Trading Economics.

What To Expect On August 21?

Friday will see major movements in market as data of S&P Global U.S. Manufacturing Index, and S&P Global U.S. Services PMI is scheduled.

Further, companies like BJ's Wholesale Club Holdings Inc. (BJ), Buckle Inc. (BKE), Ke Holdings Inc. (BEKE), MINISO Group Holdings Ltd. (MNSO), and Ubiquiti Inc. (UI) will announce their quarterly reports.

On Friday, Rajesh Palviya, Head of Research at Axis Securities, said, "Global cues have turned cautious, with the Dow falling 1.32%, the S&P 500 declining 0.87% and the Nasdaq losing 1%. Asian markets have opened weaker, with Japan's Nikkei down around 1.4%. Brent crude remains elevated near $93 a barrel amid renewed US-Iran tensions..."

On the geopolitical front, Ponmudi R, CEO of Enrich Money, said, the U.S. has announced plans to impose what Treasury Secretary Scott Bessent described as the "toughest sanctions in history" on Iran. The move has added another layer of uncertainty to the already fragile Middle East backdrop, particularly around the Strait of Hormuz, and could keep the geopolitical risk premium embedded in crude oil prices.

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