U.S. stock index futures pointed to a higher open on Monday, with the Nasdaq 100 leading the charge after a turbulent week. Nasdaq 100 futures surged 1.12% to 29,696.00, outpacing both the S&P 500 and Dow Jones futures, which rose 0.74% and 0.36%, respectively. The rally comes after a week where equal-weight and small-cap stocks outperformed the cap-weighted S&P 500, signaling a potential rotation away from mega-cap tech.
Despite the positive futures move, options data from Cboe revealed that investors are paying a significant premium to hedge tech exposure. The QQQ-SPX one-month implied-volatility spread widened to 11%, the highest level in four years. This suggests that while traders are buying Nasdaq futures, they remain wary of downside risks in the technology sector. The VIX, often referred to as Wall Street's fear gauge, jumped over six points to 21.5 last week, reflecting elevated uncertainty.
The divergence between the futures rally and hedging costs highlights a cautious sentiment. Last week, the S&P 500 dropped 2%, while the S&P 500 equal-weight index climbed 1.5% and the S&P 600 small-cap index gained over 3%, with seven of 11 sectors finishing in positive territory. This breadth improvement contrasts with the concentrated losses in tech-heavy indices, suggesting a broadening of market participation.
Tech funds experienced nearly $20 billion in outflows in the week ending June 24, a sharp reversal from the $21.46 billion of inflows the prior week, according to LSEG Lipper data. U.S. equity funds overall saw $3.53 billion in net withdrawals, snapping the previous week's $37.63 billion surge. Bond funds attracted $7.33 billion, while money market funds saw $25.74 billion in outflows, indicating a shift toward fixed income.
In corporate news, Apple (AAPL) lagged its Magnificent Seven peers in premarket trading after dropping 4.8% last week, amid ongoing concerns about AI-related demand. SpaceX (SPCX) climbed 1.2% before the bell after Nasdaq announced it will join the Nasdaq 100 on July 7. J.P. Morgan (JPM) estimates passive inflows of $4.3 billion, though Morningstar's (MORN) chief equity market strategist called the stock overvalued. Viridian Therapeutics (VRDN) jumped 12.7% after FDA approval of Lumvoa for thyroid eye disease.
Geopolitical developments provided a brief boost, with reports that the U.S. and Tehran may de-escalate and restart talks. However, interest rate concerns continue to weigh on sentiment. A Reuters poll found over three-quarters of economists expect the Federal Reserve to hold rates steady through the rest of 2026, with some pricing in a possible hike. Vanguard's senior U.S. economist Josh Hirt noted that holding rather than hiking remains the most appropriate stance.
Markets are now looking ahead to the June jobs report, due Thursday, July 2, at 8:30 a.m. ET, which will be the next major test for the economy. U.S. markets will be closed on Friday, July 3, for the Independence Day holiday.
