Wall Street Eyes Mixed Start After Memorial Day Break: Tech And Meme Stocks Gain; Analyst Says Sustained Selloff 'Unlikely'

Zinger Key Points
  • Going by comments from Fed officials, it appears that a rate cut may be delayed but not ruled out totally, JPMorgan says.
  • The upcoming inflation readings therefore could clarify which way the Fed would go.
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Index futures point to a slightly higher opening for the market on Tuesday after the long Memorial Day weekend. This week marks a significant change, as the settlement cycle transitions from T+2 to T+1. The Securities and Exchange Commission expects this shift to reduce risks associated with unsettled trades, including credit, market, and liquidity risks.

Traders are carefully weighing each piece of economic data as they reassess the likelihood of future interest rate cuts. Speeches from Federal Reserve officials and an upcoming consumer confidence report are key factors influencing their decisions.

While the premarket shows strength in the big tech sector, suggesting potential gains on Tuesday, investors may remain cautious leading up to the inflation data release on Friday.

FuturesPerformance (+/-)
Nasdaq 100+0.21%
S&P 500+0.08%
Dow-0.12%
R2K+0.21%

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY climbed 0.11% to $530.04, and the Invesco QQQ ETF QQQ traded up 0.25% at $459.11, according to Benzinga Pro data.

Cues From The Past Week 

Nvidia Corp.’s NVDA earnings boosted tech stocks in the week ending May 24, with the Nasdaq Composite closing at a new high. However, strong economic data and the minutes from the April 30-May 1 Federal Open Market Committee meeting clouded the rate-cut outlook for the year.

The S&P 500 Index posted a marginal gain for the week but did not close at a new high, while the Dow Industrials and the Russell 2000 Index saw sharp declines. The Dow snapped a five-week winning streak, while the Nasdaq Composite and the S&P 500 Index extended their gains for five consecutive weeks.

IndexWeek’s
Performance (+/-)
Value
Nasdaq Composite+1.41%16,920.79
S&P 500 Index+0.03%5,304.72
Dow Industrials-2.34%39,069.59
Russell 2000-1.24%2,048.41

Insights From Analysts: JPMorgan’s weekly market recap published on Monday suggested that while a Fed rate cut may be delayed, it is not ruled out entirely. The firm stated, “Given this context — no anticipated rate hikes, potential rate cuts by year-end, and solid economic and profit growth — markets are unlikely to experience a sustained sell-off.”

Upcoming Economic Data:

This week’s key economic events include the personal income and spending report for April, due on Friday. This report features the annual rate of the core price consumption expenditure index, the Fed’s preferred inflation gauge.

Traders may also focus on the Fed speeches, the Conference Board’s consumer confidence index for May, the results of two separate March house price surveys, pending home sales for April, a regional manufacturing survey, the Fed’s Beige Book, and the preliminary read of first quarter GDP growth.

On Tuesday, S&P/Case-Shiller and the National House Finance Agency are due to release the results of their separate house price surveys for March. The data are due at 9 a.m. EDT.

Minneapolis Fed President Neel Kashkari will speak at 9:55 a.m. EDT.

The Treasury will auction three- and six-month bills at 10 a.m. EDT, two-year notes at 11:30 a.m. EDT and five-year notes at 1 p.m. EDT.

The Conference Board’s consumer confidence report, due at 10 a.m. EDT, is expected to show a slip in the headline consumer confidence index from 97 in April to 96 in May.

Fed Governor Lisa Cook and San Francisco Fed President Mary Daly will make public appearances at 1 p.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

Commodities, Bonds, and Global Equity Markets:

Crude oil and gold futures climbed on Tuesday, and the U.S. 10-year note yield was flat at around 4.463%. Bitcoin BTC/USD traded flat around $68,500. 

Major Asian markets mostly settled lower, with Singapore, Indonesia, and Taiwan bucking the downtrend. The negative sentiment reflected a lack of cues from Wall Street overnight and caution ahead of imminent inflation readings. European stocks dipped in early trading, reflecting a similar cautious sentiment.

Read Next: Bitcoin Vs. SPY Vs. Gold: If You Had $1,000 Invested In Each Of These Assets Last Memorial Day, Here’s How Much You Would Have Now

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Posted In: EarningsEquitiesNewsFuturesPreviewsTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsMoversTrading IdeasLisa CookMary DalyNeel KashkariStories That MatterUS market preview
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