The negative sentiment observed in the stock market at the beginning of the year appears to persist, with index futures pointing to a lower opening on Wednesday. Several market-moving catalysts, including the release of the Fed minutes, a Federal Reserve speech, and JOLTS data, could influence the day’s market movement. Despite the discouraging start to the year, analysts remain optimistic that momentum will carry through into 2024 as headwinds subside.
Cues From Tuesday's Trading:
Technology stocks led the market lower in the first trading session of the year, as investors sold off stocks amid concerns about valuations and uncertainties regarding the economy’s trajectory in the new year. Shortly after the market opened, S&P Global’s final manufacturing purchasing managers’ index revealed a more significant-than-expected contraction by the sector in December.
The tech-heavy Nasdaq Composite concluded sharply lower, and the broader S&P 500 Index also settled down, albeit with a more modest loss. Both averages remained in negative territory throughout the session.
The Dow Industrials started lower but underwent some volatility before finishing marginally higher, with robust gains by healthcare and financial stocks contributing to offset the weakness in the technology sector. Consequently, the index achieved a fresh closing high.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.63% | 14,765.94 |
| S&P 500 Index | -0.57% | 4,742.83 |
| Dow Industrials | +0.07% | 37,715.04 |
| Russell 2000 | -0.70% | 2,012.80 |
Analyst Color:
A fund manager suggested weakness as the one seen Tuesday should be considered as buying opportunities, premising his optimistic market outlook on earnings. “We are going to have a stunning earnings announcement season,” said Louis Navellier, adding, ”The earnings are going to be great for the next three quarters due to easy year-over-year comparisons.”
Navellier also sees decent fourth-quarter economic growth as consumers splurged on purchases during the holiday season. Also, as an added incentive, the Fed will likely begin cutting rates, he said.
“Markets do oscillate and we got overbought, so we have to give a little back,” Navellier said. Tuesday’s pullback is a ”buying opportunity, especially the big tech stocks,” he said.
Futures Performance On Wednesday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.51% |
| S&P 500 | -0.31% |
| Dow | -0.29% |
| R2K | -1.06% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.35% to $471 and the Invesco QQQ ETF QQQ slid 0.52% to $400.49, according to Benzinga Pro data.
Upcoming Economic Data:
Richmond Fed President Thomas Barkin is due to speak at 8:30 a.m. ET.
The Labor Department is scheduled to release the results of the November Jobs Opening and Labor Turnover survey at 10 a.m. ET. Economists, on average, expect job openings for the month to come in at 8.8 million, up from 8.7 million in October.
The Institute of Supply Management is due to release its manufacturing purchasing managers’ index at 10 a.m. ET. The manufacturing PMI is expected to rise from 46.7 in November to 47.2 in December. A reading below ”50″ suggests contraction.
The Fed will release the minutes of the December monetary policy meeting at 2 p.m. ET. At the meeting, the central bank opted to maintain rates unchanged at a 22-year high of 5.25%-5.50%, although it hinted at potential easing in 2024.
See also: Futures Vs. Options
Stocks In Focus:
- Jazz Pharma, Inc. JAZZ rallied nearly 25% in premarket trading after Baird initiated coverage of the stock with an Outperform rating.
- Verizon Communications Inc. VZ rose nearly 1% following KeyBanc analysts upgrading the stock.
- Moderna, Inc. MRNA could see follow-on buying, with the stock rising premarket.
- Resources Connection, Inc. RGP and Cal-Maine Foods, Inc. CALM are among the key companies due to report their quarterly results after the market close.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures fell 0.24% to $70.21 in early European session on Wednesday following Tuesday's 2.21% slump.
The benchmark 10-year Treasury note fell 0.032 percentage points to 3.976% on Wednesday.
Major Asian markets fell across the board, although China and Malaysian markets bucked the downtrend, as traders reacted to the tech-induced setback on Wall Street overnight.
The Chinese Shanghai Composite Index eked out a modest gain but the Shenzhen Component index pulled back. The Japanese market remained closed for a public holiday.
European stocks pulled back on Wednesday and were sharply lower by late-morning trading amid rising risk appetite.
Image generated using AI via midjourney
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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