U.S. stock futures are flat after major averages pull back from records

US stock index futures were flat in overnight trading on Tuesday after major averages ended in the red, weighed down by inflation fears.

Futures contracts linked to the Dow Jones Industrial Average rose 9 points. S&P 500 and Nasdaq 100 futures were also slightly higher.

The Dow closed the regular trading session down 107 points, or 0.3%. The decline came a day after the Dow closed its all-time high. The S&P and Nasdaq Composite hit all-time highs on Tuesday, then gave up those gains and ended up closing lower. The S&P 500 was down 0.35% while the Nasdaq Composite was down 0.38%, each posting their first negative session of three.

The decline came after the Labor Department said inflation rose at the fastest rate it had in nearly 13 years over the past month. According to the economists surveyed by Dow Jones, the consumer price index rose 5.4% year-on-year and was thus above expectations of a rise of 5%. However, since a significant portion of the overall increase was due to a surge in used car prices, some were quick to say that inflation is likely to be temporary.

In the middle of a bearish day on Wall Street, the S&P 500 tech sector bucked the negative trend and closed at a new all-time high. The 10 other S&P sectors fell, with real estate leading the losses.

The big averages are still hovering around their all-time highs, and Wall Street strategists are optimistic about what the second half of 2021 will bring as the economy continues to recover from Covid-19.

“After a 2020 that we will never forget, we are optimistic about the second half of 2021 and even 2022,” said Burt White, LPL Managing Director and Chief Investment Officer. “We believe we are at the beginning of the economic cycle and that the next recession may be years away.”

UBS on Tuesday raised its S&P 500 target for December 2021 to 4,500, up from an earlier forecast of 4,400. The call depends on strong numbers from the second quarter results.

“We believe the stock bull market will remain on a solid footing, fueled by huge consumer cash holdings, rising corporate investment and a still accommodating Fed,” the company said in a statement to customers.

JPMorgan and Goldman Sachs opened earnings season Tuesday, with both banks beating sales and earnings estimates. Bank of America, Citigroup and Wells Fargo are expected to report their profits before the market opens on Wednesday, as are BlackRock, PNC Financial and Delta.

A total of 23 S&P 500 companies will publish their quarterly results this week.

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