The U.S. stock market is expected to have a cautious start this week as investors eagerly await a flurry of earnings reports and pivotal economic news. Major indexes are currently sitting at or near record levels, adding to the anticipation.
Market Summary
- Dow Jones Industrial Average futures (YM00) fell 69 points, or 0.2%, to 38,189.
- S&P 500 futures (ES00) dropped 4 points, or 0.1%, to 4,913.
- Nasdaq-100 futures (NQ00) increased 17 points, or 0.1%, to 17,544.
Recap of Friday’s Trading
On Friday, the Dow Jones Industrial Average (DJIA) closed higher, rising by 60 points, or 0.16%, to reach 38,109. Meanwhile, the S&P 500 (SPX) experienced a slight decline of 3 points, or 0.07%, ending the day at 4,891. The Nasdaq Composite (COMP) took a hit, dropping 55 points, or 0.36%, to reach 15,455.
Notably, the Dow Jones Industrial Average achieved its fifth record close of the year, while the S&P 500 came within a whisker of its all-time high.
Factors Influencing the Market
This week is expected to be a significant one for earnings as several prominent companies are set to release their results. Investors will closely watch Microsoft (MSFT), Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), and Meta Platforms (META) to assess their financial performance. Additionally, market players will also keep an eye on the Federal Reserve’s interest-rate decision, jobs market data, and the Treasury’s quarterly refunding.
Richard de Chazal, a macro analyst at William Blair, noted that the Federal Reserve, being data-dependent and aiming to restore its inflation-fighting credibility, is likely to continue guiding away from a rate cut in March. However, he expects the Fed to emphasize its willingness to take necessary action, thus retaining optionality. De Chazal also anticipates more insights into the timing of the quantitative tightening tapering program.
Concerning earnings, De Chazal expressed that the results have been underwhelming thus far. While earnings for the 124 S&P 500 companies that have reported showed a 2.3% increase, below the expected 1.2% rise, the average gap of 4.4 percentage points remains a concern.
Geopolitical tensions are also impacting market sentiment following an attack that resulted in the deaths of three U.S. soldiers and injuries to 34 others in Jordan. Notably, oil futures are trading under $78 a barrel (CL00), gold prices have risen (GC00), and the yield on the 10-year Treasury (BX:TMUBMUSD10Y) has fallen. It’s worth noting that yields move in the opposite direction of prices.
