US Stocks Could Consolidate As S&P 500, Nasdaq Futures Tick Up Ahead Of Fed Chair Powell's Congressional Testimony

Zinger Key Points
  • Market participants have been discounting a 25 basis points hike at the March FOMC meeting.
  • Economic data over the next couple of weeks and Fed speeches will likely dictate near-term market direction.

Stocks could pause on Monday after returning to winning ways in the past week, as the focus shifts to Fed Chair Jerome Powell’s two-day Congressional testimony this week.

Cues From Last Week’s Trading:

U.S. stocks advanced in the week ended March 3, with the S&P 500 Index snapping a three-week losing streak. The final scoreline for the week, however, does not tell the full picture. The week’s trading was marked by volatility as the rise in bond yields, and mixed earnings and economic data confounded the picture for traders.

U.S. Indices' Performance In Week Ended March 3
Index Performance (+/-)   Value
Nasdaq Composite +2.58%   11,689.01
S&P 500 Index +1.90%   4,045.64
Dow Industrials +1.75%   33,390.35

Analyst Color:

The S&P 500 Index held its support at the 200-day moving average despite the release of some hot data, Fundstrat’s Tom Lee told CNBC’s Closing Bell on Friday. He expects the index to rally as much as 7% over the next few weeks, given the market is entering a seasonally strong period.

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He premised his expectation on the Fed settling for a 25 basis-point hike at the March meeting and slowing inflation. The upcoming inflation data will likely underline the easing in price pressure, reducing the volatility in the bond market, he suggested.

Meanwhile, former Treasury Secretary Larry Summers said the Fed should keep the door open for a 50-basis point increase in interest rates in March and decide based on the February jobs data. The economist said the Fed has not been this far behind the curve for a year or so.

Futures Today

U.S. Futures' Performance On Monday
Index Performance (+/-)  
Nasdaq 100 Futures +0.21%  
S&P 500 Futures +0.05%  
Dow Futures +0.01%  
R2K Futures -0.07%  

In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY edged up 0.07% to $404.46 and the Invesco QQQ Trust QQQ gained 0.21% to $300.30, according to Benzinga Pro data.

Upcoming Economic Data:

The Commerce Department is due to release its factory goods orders report for January at 10 a.m. EST. Factory goods orders for the month may have seen a 1.8% month-over-month drop, reversing from a rise of a similar magnitude in December.

The Treasury is set to auction 3-month and 6-month bills at 11:30 a.m. EST.

Stocks In Focus:

Apple Inc. AAPL shares rose about 1% in premarket trading after its major iPhone assembler Hon Hai Precison Manufacturing Company Limited HNHPF said its March quarter is tracking to plan despite February revenue slipping. Apple's stock was initiated with a Buy rating by Goldman Sachs.

Novavax Inc. NVAX has resumed the downtrend with a 4%+ drop.

Lordstown Motors Corp. RIDE, Scholar Rock Holding Corp. SRRK and Nutanix Inc. NTNX are among the companies due to report their quarterly results on Monday.

Top Analysts’ Call

DR Horton Inc. DHI: JPMorgan downgrades to Overweight to Neutral and reduces price target to $107 to $102.50.

KB Home Inc. KBH: JPMorgan double-downgrades shares from Overweight to Underweight and cuts price target from $36 to $32.50.

First Solar Inc. FSR: KeyBanc Capital Markets reiterates Overweight rating and increases price target from $201 to $227.

Eli Lilly & Co. LLY: Jefferies initiates at Hold with $290 price target.

Pfizer Inc. PFE: Jefferies initiates at Hold with $43 price target.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures were snapping a four-session winning streak on Monday, with a barrel of WTI-grade crude oil fetching $78.48, down 1.51%. The 10-year Treasury note yield remained below the 4% level and was at 3.915%,

Most Asian markets advanced, encouraged by Wall Street’s strong performance on Friday. Japan’s Nikkei 225 Average, South Korea’s Kospi and Taiwan’s Weighted Average Index were among the best performers, while the Chinese, Indonesian and Malaysian markets chalked up modest losses.

European stocks traded on a mixed note in late-morning trading on Monday.

Read Next: Risk On? Jeremy Siegel Sees S&P 500 Gaining 15% This Year, Here's Why

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Posted In: EarningsNewsPenny StocksFuturesPreviewsSmall CapTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsTrading IdeasDow IndustrialsInflationJerome PowellLarry SummersNASDAQ CompositeS&P 500 Index
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