Nasdaq, S&P 500 Futures Firm, China's Economic Stimulus Fuels Commodities, Bitcoin Steady: Here's What Traders Should Be Watching Tuesday

After the market ended at a fresh record on Monday, traders have positioned themselves for more gains. The index futures are modestly higher early Tuesday. China, the second largest economy in the world, decided to go bold, with the nation’s central bank announcing a series of stimulatory measures. This has sent commodities soaring, given China is a commodity-guzzling country. China’s growth has a bearing on the rest of the global economy as it is often called the world’s factory.

In the domestic market, traders may look ahead to a speech by a Federal Reserve official, a consumer confidence reading and a couple of house prices data. Momentum suggests additional gains but the overbought levels may introduce caution, especially ahead of key inflation data due this week and more labor market data that would roll out next week.

Futures	Performance (+/-)
Nasdaq 100	+0.32%
S&P 500	+0.19%
Dow	+0.17%
R2K	+0.44%

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY rose 0.23% to $570.96 and the Invesco QQQ ETF QQQ climbed 0.35% to $484.74, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks closed Monday’s session modestly higher although trading was marked by some degree of volatility. The major indices opened higher, as they digested comments from Fed officials, and reacted to S&P Global private sector activity readings, which showed the manufacturing sector contracted more than expected. Minneapolis Fed President Neel Kashkari said in an interview with CNBC’s Squawk Box that he favored a slowdown in rate cuts.

The indices traded on a nervous note, with the Dow Industrials and the Nasdaq Composite dipping below the unchanged line in the mid-session before making a comeback. The Dow hit new intraday and closing highs, while the S&P 500 Index, despite the mid-session volatility, traded in the green throughout the session and ended at a fresh high.

Among S&P 500 sectors, real estate, utility, material, energy and consumer discretionary stocks advanced solidly. On the other hand, communication services, healthcare and IT stocks experienced modest weakness.

Index	Performance (+/)	Value
Nasdaq Composite	+0.14%	17,974.27
S&P 500 Index	+0.28%	5,718.57
Dow Industrials	+0.15%	42,124.65
Russell 2000	-0.34%	2,220.28

Insights From Analysts:

The Fed delivered in line with expectations and it is now time to move to neutral on defensives vs. cyclicals, said Morgan Stanley’s U.S. Equity Strategist Mike Wilson. The valuation of defensives has reached extended levels and “we await more clarity on the labor data,” the strategist said.

“Historically, defensives see fairly persistent outperformance 3-12 months following the Fed’s first cut, but can
see initial, modest underperformance in the 1 month following the initial rate reduction,” Wilson said. The strategist recommended taking profits on the recent outperformance of defensives makes sense in the absence of knowing the outcome of the next labor report.

Wilson said he continued to have conviction in his recommendation of large caps over small caps and also his bias for high-quality names.

WisdomTree Senior Economist and Wharton Professor Emeritus Jeremy Siegel said valuations across many sectors appear stretched by historical standards, particularly in the technology sector and AI-driven companies. “This reflects a broader market anticipation of substantial growth driven by technological advancements,” he said.

“As AI continues to evolve, it will be crucial to differentiate between companies that are genuinely creating value through innovative AI applications and those whose valuations are inflated by speculative interest.”

Siegel sees big rate cuts supporting small-cap companies that borrow at short-term borrowing rates as these companies have been the most impacted by the Fed’s aggressive rate hikes and they have some relatively cheap valuations in the U.S. market.

See Also: How To Trade Futures

Upcoming Economic Data:

• Federal Reserve Governor Michelle Bowman is scheduled to speak at 9 a.m. EDT.
• The S&P/Case-Shiller and Federal House Finance Agency are due to announce the results of their separate house price surveys for July at 9 a.m. EDT.
• The Conference Board will announce its consumer confidence index for September at 10 a.m. EDT, with economists, on average, expecting the index to rise from 103.3 in August to 104 currently.
• The Treasury is set to auction two-year notes at 1 p.m. EDT.

Stocks In Focus:

• Liberty Broadband Corporation LBRDA shares soared over 18% in premarket trading after the company announced that it communicated a counterproposal to the Special Committee of the Board of Directors of Charter Communications, Inc. CHTR regarding its proposed acquisition by the latter.
• Snowflake Inc. SNOW dropped over 3% following the company’s announcement concerning a convertible note offering.
• Hawaiian Electric Industries, Inc. HE plunged over 11.50% after the company announced a commons stock offering.
• AutoZone, Inc. AZO and THOR Industries, Inc. THO are among the companies due to announce their quarterly results before the market opens.
• Those reporting after the close include KB Home KBH, Progress Software Corporation PRGS, Stitch Fix, Inc. SFIX and Worthington Enterprises, Inc. WOR.

Commodities, Bonds And Global Equity Markets:

Oil and gold futures climbed, with the latter trading in record territory amid stimulus measures announced by China’s central bank, and Bitcoin BTC/USD is little changed at $63.5K level. The 10-year Treasury note climbed 5.5 points to 3.793%.

Asian stocks, though ending mixed, saw spectacular performances by the Chinese market. The Shanghai Composite Index soared over 4% on stimulus hopes, and this positivity seeped into the Hong Kong market. The Chinese stock market gauge’s performance marked the biggest one-day gain in over four years.

The People’s Bank of China announced a slew of measures to kickstart domestic growth, which has been constrained by an ailing property sector. In a new conference in Beijing, central bank chief Pan Gongsheng said, “The reserve requirement ratio will be cut by 0.5 percentage points in the near future,” while he also hinted at reducing the policy interest rate and driving down the market benchmark interest rate to reinvigorate growth.

‘The Taiwanese and South Korean markets also recorded decent gains. The Australian market retreated amid a pause decision by the central bank.

The European markets firmed up early Tuesday.

Read Next:

• S&P 500 Outpaces Wall Street Projections As Year-End Nears: Will The Rally Hold?

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