US Stocks Look Set To Carry Last Week's Momentum Forward On Monday — Focus Now On Inflation Data, Q4 Reporting Season

Zinger Key Points
  • With the earnings season around the corner, the focus is likely to shift to preannouncements from companies.
  • Fourth-quarter expectations are muted, with profit growth of S&P 500 companies expected to drop for the first time since Q3’20.

Trading in the U.S. index futures points to a positive start by Wall Street stocks on Monday. With not much going around, traders may turn to a Fed speech, any potential preannouncements and energy prices for trading cues.

What Happened: U.S. stocks closed the week ending Jan. 6 on a positive note. On Friday, the major averages advanced strongly on the back of a monthly employment report that showed job gains exceeded expectations but a slowdown in the average hourly earnings, signaling a cool-off in inflationary pressure. Another report released on Friday showed the service sector contracted in December.

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Bad news on the economy is perceived as good news by the market, as it presents scope for Fed tapering.

U.S. Indices' Performance During Week Ended Jan. 6
Index Performance (+/-)   Value
Nasdaq Composite +0.98%   10,569.24
S&P 500 Index +1.45%   3,895.08
Dow Industrials +1.46%   33,630.61

The focus of the market now shifts to the December consumer price inflation report due on Thursday and the imminent fourth-quarter reporting season. Profit growth of S&P 500 companies is on track to drop 4.1% year-over-year — the first decline since the fourth quarter of 2020 — data provider FactSet said in its recent weekly Earnings Insight report.

More than the actual results, traders will keenly look ahead to the guidance for the upcoming quarter and 2023, given fears of an imminent recession.

Here’s a peek into index futures trading:

U.S. Futures' Performance On Monday
Index Performance (+/-)  
Nasdaq 100 Futures +0.42%  
S&P 500 Futures +0.36%  
Dow Futures +0.24%  
R2K Futures +0.60%  

In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY gained 0.37%, to $389.50, and the Invesco QQQ Trust QQQ rose 0.45%, to $270.0, according to Benzinga Pro data.

On the economic front, the December CB Employment Trend Index, constructed based on the aggregation of eight labor market indicators, is due at 10 a.m. EST.

The U.S. Treasury will auction 3-month and 6-month bills at 11:30 a.m. EST.

Federal Open Market Committee member and Atlanta Fed President Raphael Bostic is scheduled to make a public appearance.

Stocks In Focus:

Alibaba Group Holding Limited BABA rose about 5% in premarket trading after the company’s Ant Financial sister company Ant announced that Jack Ma will cede control in the fintech company.

Taiwan Semiconductor Manufacturing Company Limited TSM gained over 3% ahead of the company’s results due on Thursday.

German vaccine manufacturer CureVac N.V. CVAC jumped over 26% after the company reported positive Phase 1 study results for its flu and COVID-19 vaccine.

Tesla Inc. TSLA rose about 2%, extending its winning streak.

Oil stocks were also higher, led by Occidental Petroleum Corp. OXY and BP Plc. BP.

Commodities, Other Global Markets:

Crude oil futures were recovering from Friday’s moderate pullback. A barrel of WTI-grade crude oil rose over 3% to $76.11 on Monday.

After pulling back from over 3.7% level on Friday, the yield on the benchmark 10-year Treasury note edged up 0.035% points to 3.606%.

The major Asia-Pacific markets advanced notably on Monday, encouraged by the U.S. jobs data and the reopening of the Chinese economy from stricter COVID-19 controls. South Korea’s Kospi and Taiwan’s Weighted Index rose over 2%, while the Hang Seng and India’s Sensex also advanced notably.

European stocks are showing tentativeness following last week’s gains. The major averages in the region traded mixed in late morning deals.

Read Next: Big Banks To Kick Off Q4 Earnings Season Amid Expectations For First S&P 500 Profit Decline In More Than 2 Years

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Posted In: EarningsNewsFuturesPreviewsSmall CapTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsTrading Ideasconsumer price inflationFederal Open Market CommitteeJack MaRecessionUS Stocks
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