US Stocks Set For Nervous Start To Week As Investors Eye Inflation Data; Bitcoin Tops $72K: Why This Analyst Sees Strong First Half For April

Zinger Key Points
  • Strong economic data and comments from Fed officials that poured cold water on rate-cut expectations triggered weakness in the past week.
  • The broader S&P 500 and the Nasdaq Composite fell 0.95% and 0.80%, respectively, for week ended April 5, while Dow slipped a steeper 2%+.

U.S. stocks are expected to open lower on Monday, reversing the gains made on Friday. This shift in sentiment is likely due to rising bond yields ahead of Wednesday’s key inflation report. The CBOE Volatility Index (VIX), a measure of investor anxiety, also rose sharply and currently sits above 16.

While the recent market weakness may entice some investors to buy the dip, many may choose to wait until after Wednesday’s inflation reports for more clarity. These reports, along with a regional Federal Reserve consumer expectations survey and scheduled Fed speeches, will be closely watched by investors this week.

Futures Performance On Monday ( as of 6:20 a.m. EDT)

FuturesPerformance (+/-)
Nasdaq 100-0.12%
S&P 500-0.15%

In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY edged down 0.04% to $518.12, and the Invesco QQQ ETF QQQ slipped 0.03% to $440.34 according to Benzinga Pro data.

Cues From Last Week:

Strong economic data and comments from Fed officials that poured cold water on rate-cut expectations triggered weakness in the week ended April 5. Curiously enough, stronger-than-expected payroll gains for March were largely ignored by traders on Friday as they piled back into stocks, taking advantage of the recent weakness. Despite Friday’s recovery, the major indices all closed lower for the session.

The selling was more pronounced in the small-cap space, as these stocks underperformed amid dimming rate-cut hopes.

IndexPerformance For
Week Ended April 5 (+/-)
Nasdaq Composite-0.80%16,049.08
S&P 500 Index-0.95%5,204.34
Dow Industrials-2.27%38,904.04
Russell 2000-2.28%2,063.47

Insights From Analysts:

The market could be in for further appreciation after a strong March, said Sam Millette, Director of Fixed Income at Commonwealth Financial Network. “The economic backdrop remains supportive, and we saw businesses take advantage of the growing economy by improving their fundamentals,” the analyst said.

“The most likely path forward is further economic growth and market appreciation, but we may face short-term setbacks along the way.”

Citing Bespoke data, fund manager Louis Navellier said since 1945, the market has gained 1% or more in five consecutive months for 12 times, and the market was always positive over the next 12 months. The average gain from the end of the fifth consecutive 1%+ rising month is a 14.3% gain, he noted.

The fund manager also noted that historically the first 18 days of April contain nearly all of the net gains in the S&P 500 for April over the last 70 years.

Upcoming Economic Data:

The March consumer price inflation report, due on Wednesday, headlines the economic releases of the week. Given the Fed’s preoccupation with inflation, the CPI data and the March producer price inflation report due Thursday could be on traders’ radar. The Fed speech deluge continues with a host of speakers lined up for the week.

The other key Main Street catalysts are the weekly jobless claims report, the April preliminary consumer sentiment reading of the University of Michigan, and the minutes of the March Federal Open Market Committee meeting.

On Monday, the New York Federal Reserve is due to release the results of the inflation expectations survey for March at 11 p.m. EDT. In February, median inflation expectations remained unchanged at 3% at the one-year horizon, increased from 2.4% to 2.7% at the three-year ahead horizon, and increased from 2.5% to 2.9% at the five-year ahead horizon, according to the February Survey of Consumer Expectations.

The Treasury will auction three- and six-month notes at 11:30 a.m. EDT.

Chicago Fed President Austan Goolsbee is scheduled to give a radio interview at 1 p.m. EDT.

Minneapolis Fed President Neel Kashkari will make a public appearance at 7 p.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

  • Tesla, Inc. TSLA shares climbed over 3% in premarket trading as it strives to rebound from the 6%+ loss over the previous week.
  • Coinbase Global, Inc. COIN and Robinhood Markets, Inc. HOOD rose amid the rebound by cryptocurrencies over the weekend.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures pulled back Monday after gaining over 4.5% in the past week, while gold futures pushed toward a new high. At last check, gold futures were up modestly at $2,356 a troy ounce. The yield on the benchmark 10-year Treasury rose further above the 4.4% mark.

Bitcoin BTC/USD was on a tear, as it retested the $72,000 resistance.

Most Asian markets advanced on Monday, tracking the positive close on Wall Street last Friday, although the Chinese market lost ground. European stocks started on a firm footing, with the Euro STOXX 50 Index up 0.40% at the last check.

Read Next: ‘Not A Good Omen For Future,’ Says Cathie Wood As Economists Point To Worrisome Trends In Seemingly Strong Jobs Data

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