The upcoming week in the stock market is set to be eventful, with key data on jobs, central bank activity, and Apple earnings garnering attention from traders. Here’s an overview of how stock-index futures are currently trading:
S&P 500 Futures (ES00): Up 0.6% to 4166 (+28 points)
Dow Jones Industrial Average Futures (YM00): Up 0.5% to 32678 (+170 points)
Nasdaq 100 Futures (NQ00): Up 0.8% to 14386 (+120 points)
During the previous session, the Dow Jones Industrial Average (DJIA) experienced a decline of 367 points or 1.12%, closing at 32418. The S&P 500 (SPX) also dropped by 20 points or 0.48%, ending at 4117. However, the Nasdaq Composite (COMP) gained 47 points or 0.38%, reaching 12643.
Traders commenced Monday on a positive note, as the S&P 500, which entered correction territory along with the Nasdaq Composite last week after a decline of over 10% from its recent peak in July, sparked renewed interest among buyers.
Analysts believe that the absence of wider regional involvement in the Israel-Hamas conflict over the weekend contributed to the optimistic sentiment in the market. Stephen Innes, managing partner at SPI Asset Management, stated, “The conflict did not appear to have broader spillover effects in the Middle East… That sliver of ‘good news’ has seen the demand for safe-haven assets ease after Israel’s military action in Gaza took a more cautious approach than initially anticipated.”
In addition to geopolitical factors, recent disappointing third-quarter earnings reports have also weighed on equity benchmarks, particularly those of major technology companies that had previously driven the market higher. The upcoming release of Apple’s financial results (AAPL) after Thursday’s market close will be closely watched.
Companies Reporting Results
Companies reporting results on Monday include McDonald’s, Western Digital, and SoFi Technologies before the opening bell on Wall Street, followed by Pinterest, Transocean, and VF Corporation after the close.
Pressures on Equities
Another factor pressuring equities over the past several weeks was the rise in benchmark bond yields to 16-year highs above 5%. Concerns about a robust economy leading to high interest rates for a longer period and fears of additional Treasury issuance pushing down prices contributed to this pressure.
Treasury and Fed Announcements
Both of these issues will be addressed on Wednesday. In the morning, the Treasury will publish its quarterly refunding announcement, followed in the afternoon by the Fed’s latest interest rate decision. Investors are eager to hear if Fed Chair Jay Powell provides any clues about the trajectory of interest rates in the coming months.
Nonfarm Payrolls Jobs Report
The nonfarm payrolls jobs report on Friday is expected to play an important role in the Fed’s future deliberations.
Bank of England and Bank of Japan
The Bank of England is expected to stand pat on Thursday, while the Bank of Japan on Tuesday has the potential to impact markets through comments on relaxing its yield curve control policy.
Technical Analysis and Market Outlook
Technical analysts have noted that the S&P 500 sits below its 200-day moving average, suggesting a negative trend. However, Tom Lee, head of research at Fundstrat, believes that softer data will help restrict bond yields and support stocks. He cautions against excessive negativity and expects a break in this bearish cycle soon.