U.S. stocks are on track to rebound on Wednesday after experiencing a pullback in the previous two sessions. Pent-up buying could lift heavily weighted tech stocks and, consequently, the broader market. However, several factors will influence the market’s direction.
Investors will closely watch Federal Reserve Chair Jerome Powell‘s comments on inflation and potential monetary policy adjustments in a testimony to the House of Representatives. While a significant shift in stance is unlikely, any deviation from his recent hawkish tone could impact markets.
Upcoming data releases on the job market could offer insights into the economy’s health and potentially influence the Fed’s monetary policy decisions.
While the Super Tuesday primary results largely met expectations and may not significantly alter Wednesday’s market outlook, they remain a potential factor to watch.
Some portfolio managers view the recent pullback as a positive development. “As much as profit-taking when at all-time highs is rational, the huge amount of the money on the sidelines likely has been waiting for a pullback to add to their exposure,” said Louis Navellier.
Cues From Tuesday’s Session:
Dragged by weakness in most mega-tap tech stocks, the major averages fell sharply on Tuesday. The setback came amid nervousness about the overbought levels, especially as traders looked ahead to some key Main Street catalysts.
The major indices opened lower and languished below the unchanged line throughout the session. While the S&P 500 Index and the Dow Jones Industrial Average settled at two-week lows, the Nasdaq Composite pulled back toward its lowest in a week.
Among S&P sector classes, IT stocks experienced the biggest declines followed by consumer discretionary, real estate and communication services stocks. On the other hand, consumer staple, energy and financial stocks rose modestly.
Economic data released on Tuesday vouched for the softening of economic conditions. The Institute of Supply Management’s non-manufacturing survey showed a smaller-than-expected expansion for February. The pricing component of the survey also showed tamer inflationary pressure. Factory goods orders came in worse than expected in January.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.65% | 15,939.59 |
| S&P 500 Index | -1.02% | 5,078.65 |
| Dow Industrials | -1.04% | 38,585.19 |
| Russell 2000 | -0.99% | 2,053.71 |
Analyst Color:
Comerica Chief Investment Officer John Lynch sees the strong equity trends seen so far this year as a harbinger of better things to come. “A review of fast starts in both January and February since 1970 showed the S&P 500 Index tends to maintain strength over the remainder of that calendar year, as well as over the ensuing twelve months,” he said.
The equity market rally this year has been predicated on the optimism around AI and the firming up of corporate earnings, Lynch said. That said, the analyst cautioned of softness ahead. Presidential election years typically see volatility, with weakness likely between the primary season and heading into party conventions, he added.
“Nonetheless, we continue to view market fundamentals favorably, though we remain below consensus on corporate profitability,” the analyst said.
Futures Today
Futures Performance On Wednesday ( as of 6 a.m. ET)
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.71% |
| S&P 500 | +0.34% |
| Dow | +0.16% |
| R2K | +0.52% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY rose 0.34% to $508.91 and the Invesco QQQ ETF QQQ climbed 0.70% to $439.12, according to Benzinga Pro data.
Upcoming Economic Data:
The ADP private payrolls report for February is due at 8:15 a.m. ET, with economists estimating job gains of 150,000, on average, up from 107,000 in January.
Powell begins his two-day semi-annual monetary policy testimony, with the Fed chair speaking before the House Financial Services Committee on Wednesday.
The Commerce Department is scheduled to release its business inventories report at 10 a.m. ET. The consensus estimate calls for a 0.1% month-over-month decline in business inventories for January following a 0.4% increase in December.
The Labor Department will release the results of the Job Openings & Labor Turnover survey at 10 a.m. ET. Job openings may have edged from 9 million in December to 8.9 million in January.
The Energy Information Administration is scheduled to release its weekly petroleum status report at 10:30 a.m. ET.
San Francisco Fed President Mary Daly speaks will speak at noon ET followed by Minneapolis Fed President Neel Kashkari at 4:15 p.m. ET.
The Fed is due to release its Beige Book, which consists of anecdotal evidence of business conditions in the 12 Federal Reserve districts, at 2 p.m. ET.
See Also: Best Futures Brokers
Stocks In Focus:
- Nordstrom, Inc. JWN fell over 9.6% in premarket trading in reaction to its quarterly results.
- Other stocks moving on earnings are Ross Stores, Inc. ROST (down about 4%) and CrowdStrike Holdings, Inc. CRWD (up over 23.50%).
- Abercrombie & Fitch Co. ANF, Campbell Soup Company CPB, Foot Locker, Inc. FL, JD.com, Inc. JD, and United Natural Foods, Inc. UNFI are among the major companies reporting their quarterly results before the market open. Victoria’s Secret & Co. VSCO is due to report after the close.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures rose 0.87% to $78.83 in early European session on Wednesday after the commodity fell 0.75% on Tuesday. The yield on the benchmark 10-year Treasury note rose 0.027 percentage points to 4.164%.
The Hong Kong market led the gains in Asia, as stocks in the region settled mostly higher. The Japanese market, which closed the previous session, at a record high ended nearly flat with a negative bias, while the Chinese, South Korean, and Malaysian markets ended modestly lower.
The European markets were modestly higher in early trading, with the Euro Stoxx 50 Index up 0.33%.
Gold futures traded down after ending higher for six straight sessions and the U.S. dollar weakened against most major currency pairs, except the Swiss franc. Cryptocurrencies extended the slide, with the apex crypto, Bitcoin BTC/USD trading modestly lower.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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