U.S. stocks could shake off the past week’s negativity and push ahead on expectations of a healthy reporting season, the Federal Reserve cutting rates, and the rising odds of a victory for former President Donald Trump in the Nov. election. President Joe Biden on Sunday confirmed the inevitable by announcing that he is quitting the race. As the market begins in a price in a victory for Trump, known for his pro-business and pro-crypto stance, sentiment could reverse course from the negativity seen last week.
Bargain hunting in beaten-down stocks could lend support. Given most economic data is back-end loaded this week and the Fed has gone into a blackout period, the spotlight is likely to be on earnings that begin to trickle in.
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.86% |
| S&P 500 | +0.53% |
| Dow | +0.18% |
| R2K | +0.52% |
Cues From Last Week:
Comments from Trump, and Biden, who has since then quit the presidential race, stirred up geopolitical tensions, sending stocks lower in the latter half of the week ended July 19. Techs bore the brunt of the selling amid worries that Trump’s stance toward Taiwan may weigh down on suppliers from this island nation and Biden did his part by suggesting more China chip ban.
The market continues to struggle to find a new floor, said fund manager Louis Navellier. The historically strong first two weeks of July delivered and it’s been rocky ever since, he said. Navellier sees the pullback as more of profit taking in the biggest winners for the year.
“Hard to say if we will be looking at a full 5% correction, but we should be back on track soon if earnings continue to deliver,” he added.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -3.65% | 17,726.94 |
| S&P 500 Index | -1.97% | 5,505.00 |
| Dow Industrials | +0.72% | 40,287.53 |
| Russell 2000 | +1.67% | 2,184.35 |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY rose 0.53% to $551.88, while the Invesco QQQ ETF QQQ climbed 0.88% to $479.44, according to Benzinga Pro data.
Insights From Analysts:
Gina Bolvin, President of Bolvin Wealth Management Group, said she sees more volatility ahead. “Biden stepping down is a whole new level of political uncertainty. This may be the catalyst for market volatility that is overdue,” she said.
Commenting on the small-cap move, Carson Group’s Ryan Detrick suggested that these stocks could be in for further upside. He noted that the Russell 2,000 was up more than 10% in 10 trading days. This, the strategist, said has happened only 23 other times since 1979. “Future returns are quite strong, up nearly 27% a year later and higher 86% of the time,” he said.
Upcoming Economic Data:
The economic calendar of the week is back-end loaded, with the key June personal income and spending report, which has data on the Fed’s favorite inflation gauge, the June durable goods orders report and the first read of the second-quarter GDP report all lined up for release.
Traders may also pay attention to S&P Global’s flash manufacturing and service activity readings, the June existing and new home sales reports and the University of Michigan’s final consumer sentiment report for July.
On Monday, the Treasury will auction three- and six-month bills at 11:30 a.m. EDT.
See also: Best Futures Trading Software
Stocks In Focus:
- Nvidia Corp. NVDA rose over 2.20% in premarket trading on reports the company is working on a new chip for the Chinese market.
- Tesla, Inc. TSLA and Alphabet, Inc. GOOGL GOOG rose ahead of their earnings due after the market close Tuesday.
- CrowdStrike Holdings, Inc. CRWD extended its losses from Friday incurred on the back of the global outage caused by its update for Microsoft systems. The stock fell over 3%.
- Verizon Communications Inc. VZ is notable among the companies scheduled to report before the market opens.
- Those reporting after the close include Agilysys, Inc. AGYS, Cleveland-Cliffs Inc. CLF, Nucor Corporation NUE and NXP Semiconductors N.V. NXPI.
Commodities, Bonds And Global Equity Markets:
Crude oil futures, which fell sharply on Friday and moved below $80 a barrel, were seen extending their losses. Gold futures rose modestly and held above the $2,400 mark. The 10-year Treasury yield fell 1.4 points to 4.22%. Bitcoin BTC/USD climbed amid Biden’s decision to stand out of the presidential race and traded around the $67.4K level.
The Asian markets ended mostly lower, except the Hong Kong and Indonesian markets. China’s central bank unexpectedly cut short and long-term interest rates, its first such broad move since August last year, to support the domestic economy. The broadly negative move came amid apprehensions about the pullback by the U.S. stocks last week.
European stocks advanced strongly in early trading amid bargain hunting following last week’s losses.
Read Next:
Stocks Photo by Phongphan on Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
