Wall Street Poised For Muted Open On Mixed Earnings, With More Fed Speeches In Store: Analyst Sees S&P 500 Crossing Late-March High

U.S. stocks are on track for a mixed start on Wednesday as the market digests mixed earnings reports and looks ahead to more speeches by Federal Reserve officials. Given the paucity of any market-moving economic data, the spotlight will likely be on central bank officials’s statements about rates and inflation.

The still-contained bond yields suggest traders are still harboring hopes of rate cuts this year. The importance of each incoming data, therefore, can’t be emphasized enough. “Wall Street will continue to root for bad economic news since it wants to guilt the Fed to begin cutting key interest rates sooner rather than later,” said fund manager Louis Navellier.

Cues From Previous Session:

Some disappointing earnings, particularly from the tech space, were used by traders as a reason for profit-taking on Tuesday. To make matters worse, Minneapolis Fed President Neel Kashkari, while speaking at a Milken Institute conference., said the the Fed may have to stay higher for longer. He also opined that inflation may not be too high to contain inflationary pressure.

The major averages opened on a mixed note and experienced some volatility in the morning session. Although the indices moved uniformly higher and hovered above the unchanged line during the mid-session, they pulled back in the afternoon. While the Nasdaq Composite settled the day modestly lower, the S&P 500 Index and the Dow Industrials experienced modest gains.

Most sectors advanced, although consumer discretionary, IT, and energy stocks came under selling pressure.

In the process, the Dow Industrials extended its winning streak to five sessions, the S&P 500 was higher for a fourth straight session.

Insights From Analysts:

Despite the volatility seen in the market, the broader trajectory in the near term could be higher, said a technical analyst. Fund Strat Global Head of Technical Strategy Mark Newton said in a note on Monday equities remain in a new short-term bullish uptrend as part of intermediate-term uptrends which never wavered during the recent three-week decline. 

“While more evidence of falling Yields and the US Dollar is likely beginning in the days/weeks ahead, it's likely that the recent uptick in Healthcare, Financials and Industrials are constructive factors for this market technically and should help it broaden out,” he said. 

The analyst also attaches significance to the bounce seen in SMID-cap stocks over the past week. “This recovery is also important despite it being in its infancy,” he said. Newton said he expects the S&P 500 Index to begin its trek back to late March highs at 5264.85 and should exceed this en route to 5400.

Upcoming Economic Data:

• The Commerce Department is due to release its wholesale inventories report at 10 a.m. EDT. Economists, on average, expect a 0.4% month-over-month decline in wholesale inventories in March, reversing most of the 0.5% gain in February.
• The Energy Information Administration will release its customary weekly petroleum status report at 10:30 a.m. EDT.
• Fed Vice Chair Philip Jefferson is due to speak at 11 a.m. EDT, followed by Boston Fed President Susan Collins at 11:45 a.m. EDT and Fed Governor Lisa Cook at 1:30 p.m. EDT.
• The Treasury will auction 10-year notes at 1 p.m. EDT.

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Stocks In Focus:

• Arista Networks, Inc. ANET climbed over 7.50% in premarket trading following its earnings announcement.
• Other stocks moving on earnings are Coupang, Inc. CPNG (down over 6%), Electronic Arts Inc. EA (down about 3.50%), GoPro, Inc. GPRO (up about 3.80%), Luminar Technologies, Inc. LAZR, Match Group, Inc. MTCH (up over 16%), Occidental Petroleum Corporation OXY, Reddit, Inc. RDT (up nearly 15%), Rivian Automotive, Inc. RIVN (down over 4%), Twilio Inc. TWLO (down over 6%), RingCentral, Inc. RNG (up nearly 14%), Louisiana-Pacific Corporation LPX (up about 15%), DoubleVerify Holdings, Inc. DV (down about 39%), ZoomInfo Technologies Inc. ZI (down over 22.50%) and Lyft, Inc. LYFT (up over 5%).
• Anheuser-Busch InBev SA/NV BUD, Choice Hotels International, Inc. CHH, The New York Times Company NYT, Taboola.com Ltd. TBLA, Sunoco LP SUN, Teva Pharmaceutical Industries Limited TEVA, Uber Technologies, Inc. UBER and EchoStar Corporation SATS are among the notable companies reporting ahead of the market open.
• Those reporting after the close include Airbnb, Inc. ABNB, AppLovin Corporation APP, Beyond Meat, Inc. BYND, Bumble Inc. BMBL, Cheesecake Factory Incorporated CAKE, Exact Sciences Corporation EXAS, HubSpot, Inc. HUBS, News Corporation NWSA, Robinhood Markets, Inc. HOOD, Sunrun Inc. RUN, The Trade Desk, Inc. TTD and SolarEdge Technologies, Inc. SEDG.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures were seen extending their declines and were down about a percent and gold futures traded flattish with a slight negative bias. The 10-year bond yield rose 18 basis points but held below the 4.5% mark. Bitcoin BTC/USD fell over 2% to under $62.5K.

Most Asian markets slipped on Wednesday, tracking the lackluster performances of Wall Street stocks overnight, while the European markets firmed up in early trading.

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