U.S. stocks could get off to a tentative start on Monday after investors switched to a risk-on mode last week as the post-election rally lost some of its steam.
Economic data and Federal Reserve chair Jerome Powell's comments about the future of rate cuts put the sentiment on a dampener. Powell said the Federal Open Market Committee (FOMC) is not in a hurry after economic data showed strength.
Expectations of a further 25 basis point rate cut in December have fallen to just 62% now, down from 72% last week, according to CME Group's FedWatch tool.
| Futures | Performance (+/-) |
| Nasdaq 100 | 0.44% |
| S&P 500 | 0.09% |
| Dow Jones | -0.20% |
| R2K | 0.52% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY was up 0.13% to $586.50 and the Invesco QQQ ETF QQQ rose 0.45% to $498.78, according to Benzinga Pro data.
Cues From Last Week:
All three major indices registered a decline last week, with the tech-heavy Nasdaq seeing a bigger fall. This was the week prior, Dow Jones and S&P 500 registered their best week of the year after the election of Trump as the 47th U.S. president.
On the economic data front, U.S. export prices increased by 0.8% in October, while import prices rose by 0.3% month-over-month in October. U.S. retail sales rose 0.4% month-over-month in October compared to a revised 0.8% increase in September, topping market estimates of 0.3%
Most sectors on the S&P 500 closed on a negative note, with information technology, communication services, and healthcare stocks recording the biggest losses on Friday.
However, utilities and financials stocks bucked the overall market trend, closing the session higher.
| Index | Week’s Performance (+/-) | Value |
| Nasdaq Composite | -2.92% | 18,680.12 |
| S&P 500 | -2.28% | 5,870.62 |
| Dow Jones | -2.34% | 43,444.99 |
| Russell 2000 | -5.04% | 2,303.84 |
Insights From Analysts:
Wells Fargo's Jay Bryson thinks the recent surge in inflation could needle the Fed to reevaluate its pace of rate cuts.
"Slower progress on inflation in recent months may prompt the Fed to reevaluate its pace of easing moving forward," he said.
On the other hand, investors will keep a close eye on earnings from AI bellwether Nvidia Corp. NVDA, while Tesla Inc. TSLA investors will be interested in President-elect Donald Trump's policy outlook on regulations for autonomous driving.
Ryan Detrick, chief market strategist at Carson Group, maintained his bullish outlook on equities.
"The S&P 500 is looking at back-to-back 20% gains. The four previous times it did this (since WWII) the next year did this: 2.6%, 31%, 26.7%, 19.5%."
He underscored that while it's not unwise to be cautious about the ongoing rally, investors should not base their concerns on the upward movement so far.
Nathan Peterson, Director of Derivatives Analysis at the Schwab Center for Financial Research, laid out the thesis for market movements for the next week.
"I wouldn’t be surprised to see an attempt to rally from these levels at the beginning of the week if we can bounce from today’s lows into the close," Peterson said.
"Further rotation out of the largest market cap sector, Information Technology, or a negative response to Nvidia’s guidance, leading to a further downdraft in overall price action."
Peterson continues to maintain a cautious stance and noted that investors will wait for Nvidia earnings with bated breath.
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Upcoming Economic Data
While this week's economic calendar is not as heavy as last week's, some crucial data is scheduled for the days ahead.
- On Monday, the home builder confidence index is set to be released at 10 a.m. ET.
- Chicago Fed President Austan Goolsbee will speak at 10 a.m. ET.
- On Tuesday, data on new home construction and building permits will be released at 8:30 a.m. ET.
- Chicago Fed President Austan Goolsbee will speak at 12:25 p.m. ET.
- On Wednesday, Fed Gov. Lisa Cooks will speak at 11 a.m. ET.
- Fed Gov. Michelle Bowman will speak at 12:15 p.m. ET.
- On Thursday, initial jobless claims data will be released at 8:30 a.m. ET.
- Philadelphia Fed manufacturing survey will be released at 8:30 a.m. ET.
- Cleveland Fed President Beth Hammack will speak at 8:45 a.m. ET.
- Existing home sales data and leading economic index will be released at 10 a.m. ET.
- Kansas City Fed President Jeff Schmid will speak at 1:10 p.m. ET.
- Fed Vice Chair for Supervision Michael Barr will speak at 4:40 p.m. ET.
- On Friday, the S&P U.S. Services and Manufacturing Purchasing Manager's Index will be released at 9:45 a.m. ET.
- Consumer sentiment data will be released at 10 a.m. ET.
- Fed Gov. Michelle Bowman will speak at 6:15 p.m. ET.
Stocks In Focus:
- Tesla Inc. TSLA will be in focus after reports of Trump's transition team looking to create a framework for self-driving vehicles. Tesla stock was up 7.9% in premarket trading on Monday.
- Nvidia Corp. NVDA shares fell over 2% in premarket trading after reports said that its Blackwell AI chips are facing overheating issues.
- Super Micro Computer Inc. SMCI shares were up over 12% in premarket trading after reports suggested that the company is looking to submit a plan to be in compliance once again with the listing requirements to trade on the Nasdaq.
- Warner Bros. Discovery Inc. WBD shares surged over 1% after the company reached an agreement with the National Basketball Association (NBA) over TV rights.
- T-Mobile US Inc. TMUS shares will also be watched closely after the company was hit by Chinese hackers.
- Investors are awaiting earnings results from Trip.com Group Limited TCOM, Brady Corporation BRC, and AECOM ACM today.
Commodities, Bonds And Global Equity Markets:
Crude oil futures rose in the early New York session, gaining 0.78% to hover around $67.44.
The 10-year Treasury note yield continued to surge, rising to 4.465%.
Major Asian markets ended mixed on Monday, with Japan's Nikkei 225 falling the most. A similar sentiment was also visible in European markets, which demonstrated tentativeness in early trading.
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