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Stock futures flat ; Dow closes at record as markets await Ark ETF debut

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U.S. stock index futures were flat during overnight trading on Monday after the Dow Jones Industrial Average closed at a record high.

Futures contracts tied to the Dow declined 4 points. S&P 500 futures were 0.05% higher, while Nasdaq 100 futures added 0.08%.

During regular trading, the Dow erased a 160-point loss to close 98 points higher.

The S&P 500 and Nasdaq finished in the red, however, dipping 0.09% and 0.6%, respectively. The moves came amid the continued fallout after a hedge fund was forced to liquidate its position in several media stocks.

ViacomCBS and Discovery both slid on Monday after registering heavy losses last week prompted by Archegos Capital Management selling large blocks of stock late last week, as reported previously.

Bank stocks also declined on Monday, with Credit Suisse and Nomura posting heavy losses after warning of hits to first-quarter results following the hedge fund’s selling.

Still, despite the recent volatility, the Dow and S&P 500 are firmly higher for the month, gaining 7.2% and 4.2%, respectively.

Traders are bracing for heightened volatility during this holiday-shortened week with quarter-end rebalancing among pension funds and other big investors.

The recent swift advance in bond yields could set up money managers for big adjustments in their portfolios.

Meanwhile, Rocketship emojis get a new meaning tomorrow when the Ark Space Exploration ETF (BATS:ARKX) starts trading.

The latest exchange-traded fund from Cathie Wood — her first new ETF in nearly two years — already has Wall Street on edge. That is because retail investors see Wood as something like a modern-day Warren Buffett.

Her early bets on Tesla and Bitcoin have given her the reputation of an innovative and forward-thinking fund manager. Now, she is making a big bet on space exploration, and retail investors want to follow suit.

This means that news of the ARKX ETF release tomorrow has been a powerful catalyst. Investors frantically consumed updates on the fund. Its top 10 holdings include the likes of Trimble (NASDAQ: TRMB) and Kratos Défense & Security (NASDAQ: KTOS), as well as the L3Harris (NYSE: LHX).

The holdings focus on orbital and suborbital aerospace companies, enabling tech companies and aerospace beneficiaries.

Perhaps one of the biggest takeaways for investors is that several high-flying space stocks are not on the list. Virgin Galactic (NYSE: SPCE) comes at less than 2% weight and top space SPACs do not make the cut.

This could create downside pressure for Holicity (NASDAQ: HOL), Stable Road Acquisition (NASDAQ: SRAC), New Providence (NASDAQ: NPA), and many others.

The markets may witness moves in these names tomorrow, just as it has experienced a continued spike in TRMB and KTOS stock.

 

 

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