Earnings concerns appear to be keeping sentiment subdued as the stock market reopens following Monday’s public holiday in observance of Martin Luther King Jr. Day. Bank earnings take center stage on this week’s earnings calendar, and traders will also keep a close eye on key economic data such as retail sales, manufacturing sector indicators, and housing market metrics. Additionally, speeches by Federal Reserve officials will be in focus. After the S&P 500 nudged closer to its all-time closing highs last week, the question arises whether tech stocks, with significant weighting in the index, can provide the momentum to surpass the early-2022 historic high.
Cue From Last Week’s Trading:
U.S. stocks recorded gains in the week ending Jan. 12, 2024, responding to various catalysts, including significant bank earnings and dual inflation reports. Consumer price inflation slightly exceeded expectations, while wholesale inflation remained benign.
The S&P 500 concluded the week within 11 points of its all-time highs, with analysts optimistic that a positive fourth-quarter reporting season could propel the market even higher.
US Index Performance In Week Ended Jan. 12
| Performance (+/-) | Value | |
| Nasdaq Composite | +3.09% | 14,972.76 |
| S&P 500 | +1.84% | 4,783.83 |
| Dow Industrials | +0.34% | 37,592.98 |
| Russell 2000 | -0.01% | 1,950.96 |
Analyst Color: Fund Strat’s Tom Lee, who was fairly accurate with his market predictions in 2023, is optimistic about the S&P 500 making new highs in January. “We still see markets as making new highs in January,” Lee said. Since the index came within 1% of its all-time highs in December, a new high is imminent, he said, adding that this was the case 12 of the 12 precedent instances since 1950.
“That is, after falling 20% and recovering to within 1% of ATH, there has never been a case of a failure. New ATH within 20 trading days, or late Jan at worst.”
Lee is more confident of the second half. “Our base case for 2024 remains a tricky 1H, with the bulk of gains made in the second half of 2024,” he said.
Futures Today
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.55% |
| S&P 500 | -0.40% |
| Dow | -0.33% |
| R2K | -0.83% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY moved down 0.37% to $474.90 and the Invesco QQQ ETF QQQ fell 0.53% to $407.39, according to Benzinga Pro data.
Upcoming Economic Data:
The results of the January regional manufacturing surveys from the New York Federal Reserve and the Philadelphia Federal Reserve, the December industrial production report from the Federal Reserve, the Commerce Department’s December retail sales report, the routinely scheduled jobless claims data, the University of Michigan’s preliminary consumer sentiment index for December and a few Fed speeches could create some ripples in the market, although traders are mostly focused on earnings.
The Federal Reserve’s Beige Book and a couple of housing market readings could also evince some interest.
On Tuesday, the New York Fed will release the results of the Empire State manufacturing survey for January at 8:30 a.m. ET. The business conditions index based on the survey is expected to come in -5, which suggests continued contraction in activity. Nonetheless, the index may have improved from -14.5 in December.
Federal Reserve Governor Christopher Wallace is scheduled to speak at 11 a.m. ET.
The Treasury is set to auction three- and six-month notes at 11:30 a.m. ET.
See also: Futures Vs. Options
Stocks In Focus:
- Boeing Company BA fell over 2.50% after the Wall Street Journal said China Southern Airlines, which was supposed to purchase the U.S. aircraft manufacturer’s 737 MAX as early as January, has delayed the purchase following an accident involving another of its aircraft in the U.S.
- Tesla, Inc. TSLA moved down about 2%.
- Goldman Sachs Group, Inc. GS, Morgan Stanley MS, and PNC Financial Services Group, Inc. PNC are scheduled to report ahead of the market opening.
- Interactive Brokers Group, Inc. IBKR and Progress Software Corp. PRGS are due to release their earnings after the market closes.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures rose 0.25% to $72.97 in early European session on Tuesday after they declined 1.53% in the week ended Jan. 12, despite the supply-side tensions.
The benchmark 10-year Treasury note gained 0.061 percentage points to 4.011% on Tuesday.
Asian stocks closed mostly lower, led by the Hong Kong, Australian, Taiwanese, and South Korean markets, although the Chinese and Indonesian markets bucked the downtrend. The weakness came amid a lack of cues from Wall Street overnight and apprehensions concerning the U.S. reporting season. The European stocks were all trading moderately lower by late-morning trading.
Image generated using Midjourney AI
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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