US Stocks Set For Lackluster Start Following November's Buoyancy; Fed Chair Powell's Speeches Take The Spotlight

U.S. stocks are priming for a cautious start in the first trading session of December following Thursday’s mixed close. December, typically a seasonally strong month, could be cautiously approached by traders as the major averages have all advanced strongly this year despite the economic uncertainties. That said, if incoming evidence continues to support expectations of a soft landing scenario accompanied by a cool-off in inflation, then cash waiting on the sidelines will likely be into stocks and other risky bets, increasing the momentum of the typical “Santa Claus” rally.

Traders could closely watch Federal Reserve Chair Jerome Powell’s two public appearances as they seek clarity on the rate outlook.

Cues From Thursday's Trading:

The major indices closed mixed on Thursday, as profit-taking in some high-profile tech names weighed down on the tech-heavy Nasdaq Composite, while the Dow Industrials advanced solidly. The strong gain of the 30-stock blue-chip average was fueled by the 9%+ rally in Salesforce, Inc. CRM shares following its quarterly results. The breadth markedly favored the advancers, with 24 of the index components closing in the green.

A tamer reading for the Fed’s preferred inflation gauge also kept the risk appetite alive.

The broader S&P 500 Index, which traded below the unchanged line for the bulk of the session, recovered in a last-hour push upward.

Notwithstanding the mixed performance on Thursday, the three averages had a buoyant November. The S&P 500 and the Nasdaq Composite had their best monthly performances since July 2022. The Dow closed snapped three straight months of losses and settled at the highest level since Jan. 13, 2022.

US Index Performance On Tuesday

Carson Group’s Ryan Detrick said the strong showing in November bodes well for the market performance in 2024. The analyst shared historical data on the S&P 500’s performance in years when the preceding November clocked stellar gains, which showed the November gains nearly doubling or more than doubling in the upcoming year.

Futures Today

Futures Performance on Friday

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY edged up 0.02% to $456.51 and the Invesco QQQ ETF QQQ fell 0.11% to $388.39, according to Benzinga Pro data.

The CBOE Volatility Index is trading moderately lower, pointing to expectations of reduced volatility in the market.

Upcoming Economic Data:

S&P Global will release its manufacturing purchasing managers’ index at 8:45 a.m. ET. The manufacturing PMI is expected to slip from 50, a reading that demarcates expansion and contraction, in October to 49.6 in November.

The results of the Institute for Supply Management’s survey are to be released at 10 a.m. ET is expected to show the manufacturing PMI edging up from 46.7 in October to 47.6 in November. A reading below 50 suggests the sector is still in contraction.

The Commerce Department is due to release its construction spending report for October at 10 a.m. ET. Economists, on average, expect construction spending to rise 0.4% month-over-month, the same pace as in September.

Chicago Fed President Austan Goolsbee is scheduled to speak at 10 a.m. ET.

Fed Chair Powell will participate in a fireside Chat at Spelman College, Atlanta, Georgia, at 11 a.m. ET and Powell and Fed Governor Lisa Cook are due to participate in a roundtable discussion with local leaders in Atlanta at 2 p.m. ET.

See also: Best Futures Trading Software

Stocks In Focus:

• Dell Technologies Inc. DELL fell about 5.75% in premarket trading following its quarterly results announcement.
• Other stocks moving on earnings news are PagerDuty, Inc. PD (up over 6.50%, Ulta Beauty, Inc. ULTA (up about 11%), and UiPath Inc. PATH (up over 15.5%).
• Tesla, Inc. TSLA fell over 1% following lukewarm reception to its Cybertruck following Thursday’s delivery event.
• Bank of Montreal (BMO) and Genesco Inc. GCO are among the companies due to report their quarterly results before the market open.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures edged up 0.12% to $76.05 a barrel in early European session on Friday following the 2.44% plunge on Thursday. The weakness came despite the OPEC+ members, who met on Thursday and agreed to deepen voluntary production cuts.

The yield on the benchmark 10-year U.S. Treasury slipped 0.008% to 4.342% on Friday.

The U.S. dollar extended its weakness into December as hopes concerning a Fed pivot gained ground as economic evidence continued to vouch for the softening of inflationary pressure.

Asian stocks ended Friday’s session on a mixed note, as they reacted to the mixed close on Wall Street and worries concerning the Chinese economy. The major European markets were firmer by late-morning trading.

Photo by Jirapong Manustrong on Shutterstock

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