Early indications suggest tech stocks could extend their strength, potentially propping up the market that has been on an extended run. The results of the 10-year note auction could also impact sentiment. Some profit-taking cannot be ruled out ahead of Thursday’s consumer price inflation report.
Cues From Last Session:
After a positive open, the Nasdaq Composite and the S&P 500 indices stayed mostly higher, although closing sharply off their early highs. Yet, these two averages set new intraday and closing records during the session. The underperformance of the Dow Jones Industrial Average continued as it languished in negative terrain but for some mid-session strength.
The stock market could face difficulty sustaining the upward momentum seen in the first half of the year, said LPL Financial analysts in the firm’s mid-year outlook. The first-half outperformance, the firm said, is driven by anticipation of looser Fed policy and robust corporate earnings growth. “However, elevated valuations and potential volatility, especially with the upcoming U.S. presidential election, suggest a more cautious approach moving forward.”
Mark Newton, Global Head of Technical Strategy at Fundstrat, said the financial sector is worth keeping an eye on as it has been coming back to life. The strategist said the divergence between the large-cap tech and broader market and the economic weakness has been used as an excuse to bet on a market correction and/or underperformance. “There’s no saying that Tech HAS to peak out while others still languish,” he added.
“There’s obviously that “other” scenario, where the broader market comes back to life as rates fall.”
See Also: How to Trade Futures
Stocks In Focus:
Commodities, Bonds And Global Equity Markets:
Crude oil futures are little changed with a negative bias after they declined for three straight sessions. While gold futures were rising for a second straight session. The benchmark 10-year Treasury note yield fell 2.7 points to 4.27%, while Bitcoin (CRYPTO: BTC) rallied more than 2% to above the $58.6K level.
The Asian market closed Wednesday’s session on a mixed note, with weaker Chinese consumer price inflation data weighing down on the Chinese and Hong Kong markets. The Japanese market, on the other hand, advanced and the Taiwanese market received support from a tech rally.
European stocks are recovering from the weakness seen in the aftermath of the regional election results.
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