Trading in the U.S. index futures suggests that stocks may get off to a strong start in the first trading session of 2023. The mood is in contrast to the cautious outlook given by most Wall Street analysts regarding the year's market trajectory.
What Happened: Stocks closed modestly lower in the final trading week of the year, as the Santa Claus rally many were hoping for proved to be a non-starter. Traders continued to fret over the fear of a hard landing and the Fed taking rate hikes too big and too far.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | -0.30% | 10,466.48 | |
| S&P 500 Index | -0.14% | 3,839.50 | |
| Dow Industrials | -0.17% | 33,147.25 |
The three averages finished down 33.10%, 19.44%, and 8.87%, respectively, for the year.
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Analysts have been guarded with their expectations for 2023, with year-end S&P 500 targets of analysts ranging from 3,400 to 4,750. This range suggests the broader market could close with a loss of 11.5% to a gain of 23.7%.
Most analysts stick by their recession call for 2023. Wells Fargo expects the U.S. to go into a recession in the first half of 2023 and continued global economic slowdown, as the past year’s monetary policy tightening and money growth slowdown work with a lag.
This, according to the firm, will drive down corporate earnings growth and create important inflection points for investors over the next nine to 12 months.
Here’s a peek into index futures trading:
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | +0.99% | |
| S&P 500 Futures | +1.08% | |
| Dow Futures | +0.82% | |
| R2K Futures | +1.36% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY climbed 0.86%, to $385.73, and the Invesco QQQ Trust QQQ jumped 1%, to $268.94, according to Benzinga Pro data.
On the economic front, the final S&P U.S. manufacturing purchasing managers’ index for December is due at 9:15 a.m. EST. Economists, on average, expect the headline index to slip from 47.7 in November to 46.2, confirming the flash estimate released in mid-December.
The Commerce Department is scheduled to release its construction spending report for November at 10 a.m. EST. On a month-over-month basis, construction spending may have fallen 0.4% compared to a 0.3% drop in October.
The Treasury is set to auction three-month and six-month bills at 11 a.m. EST.
Stocks In Focus:
- Tesla Inc. TSLA declined over 3.50% in pre-market trading in reaction to its fourth-quarter deliveries update.
- Novavax Inc. NVAX was finding follow-through buying amid the company’s announcement on Friday regarding the kickstarting of mid-phase trials of its COVID-19 and flu combo vaccine and flu standalone vaccine.
- Petrobras Brasileiro S.A. PBR fell over 6% after newly sworn-in President Luiz Inacio Lula da Silva said he would use state-owned companies to drive economic growth.
- Chinese e-commerce retailers Pinduduo Inc. PDD, Alibaba Holding Group Limited BABA and JD.com Inc. JD were advancing about 3% each.
Commodities, Other Global Markets:
Crude oil futures, which ended 2022 at $80.47 a barrel, have pulled back in the new year and traded down 0.66% at $79.94.
The yield on the benchmark 10-year U.S. Treasury note fell 0.09 percentage points to 3.739%.
The Asia-Pacific markets ended Tuesday’s session on a mixed note, with the Hong Kong, China and Taiwanese markets advancing notably, while the Australian, Malaysian and New Zealand markets pulled back steeply.
European stocks got off to a strong start on Tuesday and have gained further ground since then.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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