Wall Street Eyes Muted Open As Caution Prevails Before Key Inflation Data: Analyst Sees Buying Opportunities In Any Pullback

Following Wednesday’s late surge that pushed the S&P 500 Index to a record high, the market sentiment has shifted to cautious. Stock futures on Thursday indicate a flat open on Thursday as traders likely seek to lock in profits before Friday’s release of the key personal consumption expenditure (PCE) data, the Federal Reserve’s preferred inflation gauge. However, it’s important to note the market is closed on Friday due to the Good Friday holiday.

Cues From Previous Session

U.S. stocks ended their three-day losing streak on Wednesday. The Dow Jones Industrial Average and the S&P 500 hovered near flat levels throughout the day. The technology sector displayed hesitation, with the Nasdaq Composite giving up early gains and fluctuating near the unchanged line until a late-session rally propelled it to a solid close.

The S&P 500 closed at a new record high but fell short of surpassing its intraday peak. Notably, all 11 S&P sector classifications finished positive, with real estate and utilities leading the gains.

Small-cap stocks displayed noteworthy outperformance, with the Russell 2,000 Index surging over 2% for the session. Commenting on this strength, Ryan Detrick of Carson Group said: “Historically cheap valuations, improving confidence, and strong EPS/revenue expectations (thanks to a healthy economy) are all other reasons we expect to see a big rally in ’24 from this area.”

Insights From Analysts:

Not deterred by the extended runup, an analyst recommends staying invested in stocks. “The S&P 500 remains in a strong uptrend, supported by broad participation and cyclical leadership. While stocks are extended to the upside, this backdrop suggests pullbacks should be used as buying opportunities,” said LPL Financial’s Chief Technical Strategist Adam Turnquist.

“Improving relative strength in industrials, financials, and materials provides additional evidence of a bullish rotation that has largely been overshadowed by mega caps and AI enthusiasm,” he added. He noted that over 80% of the S&P 500 stocks traded above their 200-day moving averages and nearly one-fourth of the constituents closed at 52-week highs last week, marking the highest level since May 2021.

“Over the last 25 years, when the percentage of new 52-week highs crossed above the 20% threshold — as it did last week — forward three-month returns for the S&P 500 averaged 1.8%, with 74% of occurrences generating positive returns,” he said.

Turnquist said there could be further upside in April. “Election year lows are often set in Q1, while the S&P 500 has posted an average April return of 1.5% since 1950,” he noted.

Futures Today

Futures Performance On Thursday ( as of 7:15 a.m. EDT)

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY edged down 0.03% to $523.02, and the Invesco QQQ ETF QQQ slipped 0.04% to $444.64 according to Benzinga Pro data.

Upcoming Economic Data:

The Labor Department is scheduled to release its weekly jobless claims data at 8:30 a.m. Economists, on average, expect the number of individuals claiming unemployment benefits to come in at 214,000 in the week ended March 23, up from 210,000 in the previous week.

The Bureau of Economic Analysis is due to release the final first-quarter GDP estimate at 8:30 a.m. EDT. The GDP growth is expected to be left unrevised at the previously reported 3.2%.

The ISM-Chicago will release the results of the regional manufacturing survey at 9:45 a.m. EDT. The Chicago business barometer is expected to rise modestly from 44 in February to 45 in March. A reading below 50 suggests a contraction in activity.

The National Association of Realtors is due to report its pending home sales data at 10 a.m. EDT. The consensus estimate calls for a 1.0% month-over-month increase in the pending home sales index in February, reversing the 4.9% drop in January.

The University of Michigan is scheduled to release its final consumer sentiment reading for March at 10 a.m. EDT. The flash reading released earlier this month came in at 76.5, down from 76.9 in February. Traders may also focus on the inflation expectations readings of the report.

See also: Best Futures Trading Software

Stocks In Focus:

• RH RH rose about 8% in premarket trading following its quarterly results announcement.
• Walgreens Boots Alliance, Inc. WBA, Oxford Industries, Inc. OXM and Semtech Corporation SMTC are among the key companies due to release their quarterly results on Thursday.
• Specialty chemicals company Chemours Company CC fell over 11% after the company disclosed revisions to past financials following an internal audit review.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures rose over 1% to over $82 after Wednesday’s modest retreat. Gold futures last traded at $2,233.25 per troy ounce, up about a percent, just off the day’s high of $2,234.35. The yield on the benchmark 10-year Treasury remained around the 4.2% level.

Bitcoin BTC/USD was up modestly and traded around the $70,500 level. In Asia, market sentiment was mixed, with Japan’s Nikkei 225 pulling back sharply while the Singaporean, Indonesian, Malaysian, South Korean, and Taiwanese markets also retreated. The rest of the major markets rallied, led by Hong Kong.

European stocks traded slightly higher in early trading.

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