Nasdaq, S&P 500 Futures Rise Ahead Of Apple Earnings: Why This Analyst Thinks 'No Cut' Scenario May Not Be Negative For Market

Zinger Key Points
  • Despite Fed Chair Jerome Powell treading a dovish line, the major averages closed mixed on Wednesday.
  • Economists expect the number of individuals filing for unemployment benefits to come in at 212,000 in the week ended April 25.

U.S. stocks look to push ahead on a positive path, now that the Federal Reserve’s rate decision is in the rearview mirror. Major index futures point to a positive open on Thursday. Pent-up demand following the recent losses could provide some upward thrust to the market but a lot would ride on the earnings reports that traders get to digest.

Apple, Inc. AAPL is on track to report after the market closes, while most tech earnings released after Wednesday’s closing bell have triggered negative reactions. Traders may also watch out for the jobless claims data and bond yields, given their significance for the Fed funds rate.

FuturesPerformance (+/-)
Nasdaq 100+0.95%
S&P 500+0.64%
Dow+0.36%
R2K+0.87%

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY climbed 0.67% to $503.71, and the Invesco QQQ ETF QQQ jumped 0.97% to $425.62, according to Benzinga Pro data.

Cues From Previous Session:

Despite Fed Chair Jerome Powell treading a dovish line, the major averages closed mixed on Wednesday. Stocks mostly languished sideways until the afternoon, characteristic of a Fed decision day. They began to rise after the pause verdict was announced and the upward momentum accelerated after Powell’s press conference.

The Fed chief made it clear that the Fed would likely ease rather than tighten further and also conceded that the monetary policy is restrictive. Sentiment reversed course in the last thirty minutes of trading and the averages reversed course before closing mixed.

The S&P 500 and the Nasdaq Composite fell for a second straight session, returning to their lowest closing level since April 22. The Dow Industrials ended higher, thanks to strong gains in the shares of Johnson & Johnson JNJ and Amazon, Inc. AMZN. Energy and IT stocks fell sharply, while utility and communication services stocks gained ground.

IndexPerformance (+/-)Value
Nasdaq Composite-0.33%15,605.48
S&P 500 Index-0.34%5,018.39
Dow Industrials+0.23%37,903.29
Russell 2000+0.32%1,980.23

Insights From Analysts:

There is more downside risk to the market in the intermediate term, said Morgan Stanley’s Lisa Shalett. She noted that the prospect of interest rate cuts helped buoy stocks in the first quarter. The strength continued, thanks to decent first-quarter 2024 company earnings results thus far as well as investors' hope that above-trend economic growth could offset any negative effects from higher rates.

The odds of the more concerning recessionary “hard landing,” in which the economy slows sharply, have jumped to about 25%-30%, she said. 

Larry Tentarelli, Chief Technical Strategist, Blue Chip Daily Trend Report, said a “no cut scenario” in 2024 may not be a negative, as long as inflation does not turn up and the economy holds up reasonably well.

“We believe that the Fed will remain data dependent, meeting to meeting. Unless 12-month core PCE starts to drop meaningfully, to at least 2.40% or less in the next two months than any rate cuts could be delayed, including for all of 2024,” he said.

“A caveat here would be the labor market and if jobs start to weaken notably. A very weak jobs market could prompt the Fed to cut, but this is not the case now, with a very strong labor market.”

Upcoming Economic Data:

  • The Labor Department is due to release its jobless claims report at 8:30 a.m. EDT, with economists, on average, expecting the number of individuals filing for unemployment benefits to come in at 212,000 in the week ended April 25. This compares to the previous reporting week’s 207,000.
  • The Labor Department will also release its preliminary first-quarter productivity and costs report around the same time. The consensus estimates call for a 0.5% quarter-over-quarter increase in non-farm productivity and a 4% increase in unit labor costs. This compares to 3.2% and 0.4% growth rates, respectively, for the fourth quarter.
  • The Commerce Department is scheduled to release its trade balance and factory goods orders data, both for March, at 8:30 a.m. EDT and 10 a.m. EDT, respectively. The trade deficit may have widened to $69.5 billion, up from a deficit of $68.9 billion in February. Factory orders may have increased 1.7% month-over-month, faster than the 1.4% growth in February.
  • The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

  • Shares of freight & logistics company C.H. Robinson Worldwide, Inc. CHRW climbed over 12% in premarket trading following its quarterly results.
  • Other shares moving on earnings news are eBay Inc. EBAY (down over 3%), Etsy, Inc. ETSY (down over 12.50%), First Solar, Inc. FSLR (down about 2.50%), Freshworks Inc. FRSH (down over 27%), Kulicke and Soffa Industries, Inc. KLIC (down about 4%), MGM Resorts International MGM (up over 6%), NETGEAR, Inc. NTGR (down over 20%), Monolithic Power Systems, Inc. MPWR (up over 4%), Qorvo, Inc. QRVO (down over 10%), Sunnova Energy International Inc. NOVA (up over 3.50%), Upwork Inc. UPWK (up about 10%), Wolfspeed, Inc. WOLF (down about 9%), DoorDash, Inc. DASH (down over 12%) and Zillow Group, Inc. ZG (down over 6%).
  • ConocoPhillips COP, CyberArk Software Ltd. CYBR, Ferrari N.V. RACE, Intercontinental Exchange, Inc. ICE, Kimco Realty Corporation KIM, Moderna, Inc. MRNA, PENN Entertainment, Inc. PENN, Wayfair Inc. W and Zoetis Inc. ZTS are among the notable companies reporting earnings ahead of the market opening.
  • Notable names reporting after the close are Amgen, Inc. AMGN, Apple, Inc. AAPL BigBear.ai Holdings, Inc. BBAI, BJ’s Restaurants, Inc. BJRI, Booking Holdings Inc. BKNG, Cloudflare, Inc. NET, Coinbase Global, Inc. COIN, Consolidated Edison, Inc. ED, DraftKings Inc. DKNG, Five9, Inc. FIVN, Expedia Group, Inc. EXPE, Illumina, Inc. ILMN, Live Nation Entertainment, Inc. LYV, United States Steel Corporation X, Regency Centers Corporation REG, Reinsurance Group of America, Incorporated RGA, Pioneer Natural Resources Company PXD, Opendoor Technologies Inc. OPEN and Monster Beverage Corporation MNST.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures, which slumped over 3.50% Wednesday following the Fed decision, recovered slightly on Thursday but held below the $80 psychological resistance. After advancing modestly on Wednesday, gold futures reversed course, with an ounce of the yellow metal fetching $2,307.45.

After Wednesday’s retreat, the 10-year note yield edged up and was around the 4.62% mark.

Bitcoin BTC/USD fell below $60,000 but saw a modest recovery early in U.S. premarket hours.

Asian markets, which reopened after Wednesday’s Labor Day holiday, ended mostly higher, led by the Hong Kong market. The Chinese market remained closed for a second day, in observance of Labor Day. European stocks pulled back in early trading, with the Euros STOXX 50 Index down over 0.40%.

Read Next: Bitcoin Selloff Just Getting Started? Gold Bull Peter Schiff Spots Bearish Technical Pattern As BTC Drops Below $60K

Photo via Shutterstock.

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Posted In: EarningsEquitiesNewsFuturesPreviewsTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsMoversTrading IdeasJerome PowellLisa Shalett.Stories That MatterUS market preview
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