Nasdaq Futures Deflate As Apple Leads Tech Disappointments: Traders Look To Jobs Data For Mitigating Impact

Trading in the U.S. index futures suggests stocks may end a solidly positive week on a negative note. That said, the data-dependency of the Fed places the onus of providing trading cues to each incoming economic data. The U.S. non-farm payrolls data due ahead of the market open, if perceived as conducive for monetary policy loosening, could override the present negative sentiment.

Cues From Friday’s Trading:

Stocks gap-opened higher on Thursday, capitalizing on positive tech earnings. The major averages then showed divergence, with the Dow Industrials languishing mostly below the unchanged line before closing lower. The S&P 500 Index and the Nasdaq Composite hovered above the flat line through the session before closing notably higher.

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The Nasdaq Composite and the S&P 500 Indices are now at their highest levels since Aug. 25.

Technology, communication services and consumer discretionary stocks once again led from the front on Thursday, while energy, material and healthcare stocks lost ground in the session.

Analyst Color:

The S&P 500 Index formed a golden cross, a technically important formation when the shorter-term 50-day simple moving average climbs above the 200-day simple moving average. Carson Group’s Ryan Detrick noted that there have been 37 golden crosses on the S&P 500 Index since 1950.

Historically this formation showed the market advancing a year later 78% of the time, and the median one-year has been 12.7%, he noted.

LPL Financial’s asset allocation strategist Barry Gilbert said, despite the strong start to 2023, the year will provide its share of market ups and downs and there are plenty of risks to monitor closely, including a possible recession, continued tightening by the Federal Reserve, still high inflation despite strong signs that it’s settling down, and the conflict in Ukraine.

“But after 2022, it’s good to have a solid month in the books to start the year,” he added.

Futures Today

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY fell 0.69%, to $413.90, and the Invesco QQQ Trust QQQ plunged 1.34%, to $307.55, according to Benzinga Pro data.

Upcoming Economic Data:

The Labor Department is scheduled to release its non-farm payrolls report for January at 8:30 a.m. EST. Economists, on average, expect that the month may have seen job gains of 185,000 compared to the 223,000 positions added in December. The unemployment rate may have edged up one-tenth of a percentage point to 3.6%. The month-over-month and annual changes of the average hourly labor, an inflation measure, are expected to be 0.3% and 4.3%, respectively.

S&P Global is scheduled to release its service sector purchasing managers’ index for January at 9:45 a.m. EST. The consensus estimate calls for an increase in the index from 45 in December to 46.6.

At 10 a.m. EST, the Institute for Supply Management is due to release its non-manufacturing index. The metric is expected to climb from 49.6 in December to 50.4 in January, signaling that the service sector entered expansion territory. A reading of 50 is considered as a cut-off level to demarcate expansion and contraction.

Stocks In Focus:

• Luxury retailer Nordstrom Inc. JWN surged over 27% higher in premarket trading after Bloomberg reported that Ryan Cohen has built up a stake in the company in a bid to effect management changes.
• Apple Inc. AAPL fell about 3.5% on its first-quarter miss.
• Ford Motor Company F, Amazon Inc. AMZN and Alphabet Inc. GOOGL GOOG, Qualcomm Inc. QCOM, and Amazon Inc. AMZN all retreated following their quarterly results announcements.
• Gilead Inc. GILD rose over 3% in reaction to its quarterly results.
• Regeneron Pharmaceuticals Inc. REGN, Cigna Inc. CI and Sanofi SNY are among the companies reporting their results before the market open.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures extended their slide and traded down 0.40% at $75.58 a barrel. The 10-year U.S. Treasury yield edged down further below 3.4% and traded at 3.39%, down 0.008 percentage points.

The Asia-Pacific markets, with the exception of Hong Kong and China, closed higher, capitalizing on the positive lead from Wall Street overnight.

European stocks were mixed in late morning trading, with the German and French markets retreating notably, while the U.K. market bucked the downtrend and rose modestly. The negative sentiment reflected the weakness seen in the U.S. index futures and fears the European Central Bank following up on its Thursday’s 50 basis point interest rate hike and upwardly adjust rates further.

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