(Bloomberg) -- Nasdaq 100 futures advanced Wednesday while S&P 500 contracts inched higher as investors took a breather from a rout in U.S. technology shares and factored in a report that a Covid-19 vaccine trial was paused.
Nasdaq 100 futures gained 1.6% as of 10:20 a.m. in London, after reversing an earlier slide of 1.1%. Contracts on the S&P 500 climbed 0.7%. Shares in exchange-traded funds that track the S&P 500 and Nasdaq 100 indexes had turned sharply lower after AstraZeneca Plc has put on hold a study testing a Covid-19 vaccine. The company’s shares were down 0.9% in London.
“During the cash market open we had pretty broad bleeding across all the growth sectors so it’s possible that some traders, especially CTAs, thought there was too much contagion and wanted to take the other side,” said Max Gokhman, Pacific Life Fund Advisors’ head of asset allocation, referring to commodity trading advisors. “Prices got way ahead of fundamentals with new all-time records, so giving back some of that makes sense.”
The selloff in the U.S. picked up steam in Tuesday’s cash session as investors fled the high flyers that fueled a historic five-month rally. Volatility roiled financial markets, sending the Nasdaq 100 down 4.8% and leaving it 11% off its record set last Wednesday. Tesla suffered the worst rout in its history and is now down 34% in September.
Signs had been mounting that bulls had taken the rally too far, as retail investors piled into momentum trades, snapped up shares of bankrupt companies and used leverage in the options market to fuel further gains in targeted tech stocks.
In Europe, the Stoxx Europe 600 Index rose 0.8%, recovering from a 1.2% decline on Tuesday. The sub-index tracking technology shares in the region advanced 0.8%.
“Just from the strength of the recovery that we saw since March, with tech leading the equities year-to-date and leading the way out of the market bottom, it’s definitely to be expected you’d have a correction,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors.
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