The resilient U.S. stock market is on track to close the week on a positive note as futures pointed to a modestly higher open on Friday, with the small-cap space potentially leading the upside. Earnings reactions have largely been negative, and oil has reversed course. The upward momentum that has been in play in recent sessions could cushion the market, especially as most major indices are in uncharted territory. Seasonal factor revisions to the Labor Department’s consumer price inflation estimates and a speech by the Federal Reserve could also guide the trading direction for the session.
Cues From Thursday's Trading:
The ongoing earnings growth momentum helped allay trader concerns about a potential pullback from record high levels and the rate worries triggered by the jobless claims data, which reinforced the strength of the labor market and, in turn, the economy. The extended rally in crude oil propped up energy stocks.
The major averages opened Thursday’s session higher and lost ground immediately after. The Nasdaq Composite recovered and stayed above the unchanged line throughout the remainder of the session. The S&P 500 Index and the Dow Industrials, the record breakers, traded mostly lower before making a comeback in late trading. The latter two averages raced to fresh record closes, with the S&P 500 Index breaking above the 5,000 psychological barrier for the first time ever.
Among S&P sector classes, energy stocks gained notably, while real estate and communication services stocks also found modest buying. On the other hand, financial, material, utility, and healthcare ended lower.
US Index Performance On Thursday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.95% | 15,756.64 |
| S&P 500 Index | +0.06% | 4,997.91 |
| Dow Industrials | +0.13% | 38,726.33 |
| Russell 2000 | -0.17% | 1,953.63 |
Analyst Color:
Shrugging off the recent consolidation phase in the market, a fund manager said the momentum continues to be higher. “Stocks are digesting the recent gains, but the momentum continues higher,” said Louis Navellier.
He also said traders weren’t too worried by the rise in bond yields. Despite the significant run-up in interest rates in February, all major indices, except the Russell 2,00 Index, have powered here, he said.
“The linkage to interest rates appears to be weakening,” Navellier said.
“It appears likely that if the S&P can close above 5,000 in the next few days we could see another leg up, though the seasonally weak month of March is looming.”
Carson Group’s Ryan Detrick shared historical data to show why the S&P 500’s break above the 5,000 mark is a harbinger of better times to come. Six months after the S&P 500 hit a major milestone, the returns were higher 100% of the time and the average gain was 8%. A year later, the probability of gain drops to 80% but the average return is 8.6%.
Futures Performance On Friday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.36% |
| Dow | +0.19% |
| S&P 500 | +0.09% |
| R2K | +0.58% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY moved up 0.21% to $499.38 and the Invesco QQQ ETF QQQ added 0.37% to $434.40, according to Benzinga Pro data.
Upcoming Economic Data:
The Labor Department will release seasonal factor revisions to its consumer price inflation estimates at 8:30 a.m. ET. Given the inflation obsession of the Fed, the revisions could attract attention.
Dallas Fed President Lorie Logan is scheduled to speak at 1:30 a.m. ET.
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Stocks In Focus:
- Cloudflare, Inc. NET climbed about 27% in premarket trading in reaction to its earnings announcement.
- Other stocks reacting to earnings are Affirm Holdings, Inc. AFRM (down about 9%), Boyd Gaming Corporation BYD (up about 4%), Expedia Group, Inc. EXPE (down over 15%), Illumina, Inc. ILMN (down about 2%), Pinterest, Inc. PINS (down about 8.50%), and Take-Two Interactive Software, Inc. TTWO (down about 8.50%).
- Catalent, Inc. CTLT, Magna International Inc. MGA, and PepsiCo, Inc. PEP are among the notable companies due to report their earnings ahead of the market opening.
- WK Kellogg Co KLG jumped over 15.5% after the company, which was spun off from Kellogg, late last year, declared a dividend.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures edged down 0.10% to $76.14 in early European session on Friday, as the commodity snapped a four-session winning streak. On Thursday, oil spiked over 3%. The benchmark 10-year Treasury note edged down 0.004 percentage points to 4.166% on Thursday.
As a slew of markets in Asia remained closed for the Chinese New Year holiday, the sentiment elsewhere in the region was muted. The major European markets traded mixed in late-morning trading.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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