U.S. equity futures were slightly higher early Tuesday after breaking a winning streak as investors grew worried about stocks' stretched valuations.
Dow Jones Industrial average futures added 68 points, or 0.2%. S&P 500 futures and Nasdaq 100 futures gained 0.2% and 0.3%, respectively.
On Monday, equities dipped as investors evaluated lofty stock valuations amid recent record highs, seemingly disregarding the backdrop of Covid-19 and political turmoil.
Tesla closed down 7.8% for its first negative day in 12 and worst day since Sept. 23. Tesla shares were higher by about 2% in premarket trading Tuesday.
DoubleLine Capital founder Jeff Gundlach on Monday warned of the market's extremely high valuations relative to historical standards amid the risk of rising inflation.
"At extraordinarily high valuations is where we are, and it's being supported by massive amounts of stimulus," Gundlach told CNBC's Scott Wapner on "Halftime Report."
"If you go back four decades of stock-market data, there are many valuation metrics that are in the top 1-percentile of overvaluation. So, the thing that's keeping it going, of course, is the Fed with rates at zero and promises to stay at zero," Gundlach added. This "allows for valuations to be record-breakingly high."
"Historically, when momentum and sentiment indicators are this stretched, the market is due for a period of consolidation," said Nationwide's Chief of Investment Research, Mark Hackett.
Stocks are coming off a strong week of gains that brought all three major averages to record highs. The major averages shrugged off riots at the U.S. Capitol that led to the House Democrats introducing an article of impeachment on Monday against President Donald Trump for inciting the attack. The lower chamber plans to vote on the article sometime this week.
Outperformers on Monday were those most sensitive to economic growth, like banks, retailers and certain small-caps. Last week, President-elect Joe Biden promised an economic stimulus rollout, which he said will be "in the trillions of dollars."
The small-cap benchmark Russell 2000 was flat on Monday as big caps fell.
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