The U.S. stock rally faces the risk of stalling, as index futures point to a lower opening on Wednesday. The Dow Industrials and the Nasdaq Composite have seen gains for nine consecutive sessions, with the latter reaching a record high. As the Santa Claus rally period begins on Friday, there is a possibility of some consolidation or a modest pullback. Negative earnings from FedEx Corp. FDX could serve as a trigger.
Traders will closely monitor existing home sales and consumer confidence readings to confirm the soft-landing scenario they have begun anticipating. Bond yields remain contained, providing a reason for traders to maintain their investments in stocks.
Cues From Wednesday's Trading:
On Tuesday, stocks continued their upward climb, with the Dow Industrials achieving another record high, and the S&P 500 Index and the Nasdaq Composite both reaching fresh two-year highs. The market received support from a stronger-than-expected housing starts report, alleviating growth concerns.
The market exhibited broad-based strength, with only IT services stocks closing lower for the day. Energy and communication services stocks led the gains.
Small-cap stocks stood out with impressive gains, as the Russell 2,000 Index outperformed with a 1.94% surge. The index reached its highest level since mid-April 2022 and has gained 14.75% this year.
Louis Navellier, a fund manager, remarked, “The FOMO (Fear of Missing Out) is very high for people sitting with major assets in money markets earning less than 5% annually.”
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.66% | 15,003.22 |
| S&P 500 Index | +0.59% | 4,768.37 |
| Dow Industrials | +0.68% | 37,557.92 |
| Russell 2000 | +1.94% | 2,020.95 |
Analyst Color:
Navellier expresses confidence in the market’s ability to sustain its upward momentum through the year-end. “Christmas is looking strong, with air travel expected to set a record over the holidays,” states the fund manager. He emphasizes, “There’s no reason to expect a correction between now and year-end; only a Black Swan could upset Santa’s sleigh at this point.”
The S&P 500 Index is a mere 0.59% or 28.19 points away from achieving a new all-time closing high of 4,796.56, recorded on January 3, 2022. The intraday high of 4,818.62 was reached the following day. According to Ryan Detrick of Carson Group, when more than a year has passed since the market made a new high, the subsequent year tends to be even better when it eventually reaches one.
“Higher a year later 13 out of 14 times (92.9%) and up 14.9% on average,” he notes.
Futures Today
Futures Performance On Wednesday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.29% |
| S&P 500 | -0.20% |
| Dow | -0.12% |
| R2K | -0.11% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.21% to $473.82 and the Invesco QQQ ETF QQQ moved down 0.31% to $407.90, according to Benzinga Pro data.
Upcoming Economic Data:
The Bureau of Economic Analysis is due to release third-quarter current account data at 8:30 a.m. ET. The consensus estimate calls for a narrowing of the deficit from the second quarter’s $217.1 billion to $197.5 in the third quarter.
The National Association of Realtors will release the existing home sales report for November at 10 a.m. ET. Economists, on average, expect existing home sales to come in at a seasonally-adjusted annual rate of 3.78 million units in November, slightly down from the previous month’s 3.79-million-unit rate.
The Conference Board is scheduled to release its consumer confidence index for December at 10 a.m. ET. The headline consumer confidence index is estimated to rise from 102 to 103.8.
The Energy Information Administration is due to release its weekly petroleum status report at 10:30 a.m. ET
The Treasury will auction 20-year bonds at 1 p.m. ET.
See Also: How To Trade Futures
Stocks In Focus:
- FedEx slumped over 10% in premarket in reaction to its second-quarter earnings miss.
- Guardant Health, Inc. GH plummeted about 12% after the company said the FDA had scheduled a panel review of the company’s Shield blood test.
- General Mills, Inc. GIS, Toro Corp. TORO, and Winnebago Industries, Inc. WGO are among the companies due to report their quarterly results ahead of the market opening.
- BlackBerry Ltd. BB and Micron Technology, Inc. MU are scheduled to report after the close.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures fell 1.26% to $74.87 in early European session on Wednesday following Tuesday's nearly 1.34% rally.
The benchmark 10-year Treasury note fell 0.036 percentage points to 3.886% on Wednesday.
The major Asian markets closed mixed, with China stocks pulling back after the People’s Bank of China kept key lending rates unchanged. The Indian market also retreated sharply, while the Japanese market built on its gains, as the Bank of Japan’s dovish stance announced earlier this week triggered follow-through buying.
European stocks showed listlessness in late-morning trading on Wednesday, with the Euro STOXX 50 Index down about 0.12%.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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