Wall Street appears to be shrugging off rate worries as major stock index futures were moderately higher in early pre-market trading on Monday in the hopes of getting some respite from Big Tech earnings.
Oversold conditions could be attracting bargain hunters who anticipate continued upside surprises from the “Magnificent Seven” tech companies reporting earnings this week.
These reports feature some of the biggest names in technology: Tesla, Inc. TSLA kicks off the mega-cap earning this week on Tuesday followed by Meta Platforms, Inc. META on Wednesday, Microsoft Corp. MSFT and Alphabet, Inc. GOOGL (GOOG) on Thursday.
Global markets also reflect this earnings optimism. Asian markets, excluding China, closed significantly higher, and European stocks opened on a firmer note.
Futures Performance On Monday ( as of 6:20 a.m. EDT)
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.76% |
| S&P 500 | +0.59% |
| Dow | +0.48% |
| R2K | +0.60% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY rose 0.60% to $498.15, and the Invesco QQQ ETF QQQ gained 0.77% to $417.84, according to Benzinga Pro data.
Cues From Past Week’s Trading:
Rate worries that sent bond yields spiking higher in the wake of some strong economic data, geopolitical tensions, and mixed earnings weighed down on sentiment in the week ended April 19. Techs led the pullback, with traders opting to dump shares of AI stalwart Nvidia Corp. NVDA. The stock is technically in correction territory – a pullback of over 20% from recent highs.
The Nasdaq Composite and the S&P 500 Index ended lower for a sixth straight session, with the former pulling back toward its lowest closing level since late January. This marked the longest losing streak for both indices since October 2022.
| Index | Performance (Week Ended April 19) (+/-) | Value |
| Nasdaq Composite | -5.52% | 15,282.01 |
| S&P 500 Index | -3.05% | 4,967.23 |
| Dow Industrials | +0.01% | 37,986.40 |
| Russell 2000 | -2.77% | 1,947.66 |
Insights From Analysts:
Even as the market trades at oversold levels, it may have to contend with a couple of key catalysts, namely tech earnings reports and key inflation data, this week, said LPL Financial Chief Global Strategist Quincy Krosby.
“As events in the Middle East appear to have subsided, at the margin at least, traders and investors will be able to focus on the path of inflation with the PCE (Personal Consumption Expenditures Price Index), especially with more Fed speakers acknowledging that the pace of disinflation has stalled,” he said.
He also noted that weaker-than-expected guidance from ASML, TSMC and Netflix have triggered worries whether these are part of a broader slowdown in demand.
“As the S&P 500 valuation remains over 20 times forward earnings, investors are expecting not just strong results but strong guidance, and any disappointment from the mega-tech names reporting could push this week's oversold market deeper into oversold territory,” he added.
Upcoming Economic Data:
The personal income and spending report for March will likely be the key economic data the market is likely to focus on, in the unfolding week. The report, due Friday, would reveal whether the Fed’s favorite inflation gauge – the personal consumption expenditure index, is showing signs of resuming the downtrend.
The other key readings scheduled for the week include the advance first-quarter GDP report, S&P Global’s flash manufacturing and services sectors’ purchasing managers indices for April, durable goods orders report for April, and a couple of housing market readings.
On Monday, at 8:30 a.m. EDT, the Chicago Fed is due to release its national activity index for March.
The Treasury is set to auction three- and six-month notes at 11:30 a.m. EDT.
See Also: Best Futures Brokers
Stocks In Focus:
- Tesla fell about 2.47% to $143.42 in premarket trading following the electric-vehicle price cuts the company announced across geographies last weekend. Chinese EV startup Li Auto, Inc. LI, which announced matching price cuts, slumped over 7%.
- Albertsons Companies, Inc. ACI, Verizon Communications Inc. VZ and Zions Bancorporation, National Association ZION are among the noteworthy names reporting their quarterly results ahead of the market open.
- Those reporting after the close include Ameriprise Financial, Inc. AMP, Nucor Corporation NUE Cleveland-Cliffs Inc. CLF, Packaging Corporation of America PKG and Quest Diagnostics Incorporated DGX.
Commodities, Bonds, and Global Equity Markets:
Crude oil futures fell modestly on Monday after the recovery seen in the previous two sessions, and gold futures were down sharply under the $2,400 level.
The 10-year note yield edged up to the 4.66% mark
Bitcoin BTC/USD rose 1.61% and approached the $66K psychological barrier, after the halving event that occurred late Friday.
Asian stocks rallied across the board following last week’s slump, although the Chinese market bucked the uptrend. The decline came amid the People’s Bank of China’s decision to leave benchmark interest rates unchanged.
European markets advanced in early trading.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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