Dow futures slip 0.1% as investors pause after record quarter

Dow futures edged lower Wednesday as investors consolidated gains after the S&P 500 and Nasdaq posted their best quarter since 2020.

"Many of the dynamics that acted as tailwinds for the stock market in recent years are reversing," Bank of America analysts led by Savita Subramanian wrote in a note Tuesday. The firm left its year-end S&P 500 target at 7,100, implying about 5% downside from the prior session's close.

The S&P 500 surged 15% in the second quarter to close at 7,499, while the Nasdaq Composite jumped 21% to 26,213.72 and the Dow Jones Industrial Average added 13% to 52,317.81. All three posted their strongest quarterly performance since the pandemic-era rebound in the second quarter of 2020, when the S&P gained 20% and the Nasdaq surged 30%. The Magnificent Seven megacap tech stocks rose 11% over the period, as measured by the Roundhill Magnificent 7 ETF, with Tesla and Alphabet leading the group higher in the final days of the quarter.

The consolidation comes ahead of a busy period for markets, with the Federal Reserve's July policy meeting and the start of second-quarter earnings season both on the calendar. The 10-year Treasury yield held near 4.46%, up from 4.37% at Tuesday's open, while the U.S. dollar index was little changed at 101.10. The Cboe Volatility Index remained subdued near 15, well below its historical average of about 20, signaling limited demand for portfolio protection.

Oil prices held steady, with West Texas Intermediate crude near $70 a barrel and Brent around $73.40, as traders monitored potential peace talks between the U.S. and Iran in Qatar. Gold futures were little changed at about $4,030 an ounce, while bitcoin traded near $58,700 after falling from overnight highs above $60,500.

The Chicago PMI fell to 56.7 in June from 62.7 in May, compared with the 55.4 consensus, according to data released Tuesday by the Institute for Supply Management. The S&P CoreLogic Case-Shiller Home Price Index for 20 cities showed no month-over-month change on a seasonally adjusted basis in April, stronger than the 0.1% decline expected.

Among individual stocks, Air Products jumped more than 9% after the industrial gases company said it would take a pre-tax charge of as much as $2.9 billion to exit a Louisiana clean energy project. AeroVironment soared 19% following a better-than-expected quarterly report. On the downside, Zimmer Biomet dropped more than 7% after agreeing to buy a medical device business from Pacira BioSciences for as much as $140 million.

Stock and bond markets will be closed Friday for the Independence Day holiday.

This article is for informational purposes only and does not constitute investment advice.