US Stocks Set For Strong Start, Micron Jumps, China Commits More Stimulus: Strategist Flags 'Tremendous' Gains Near Term

Micron, Inc.’s MU earnings could revitalize the sagging market momentum, with the index futures trading notably higher early Thursday. The risk-on mood was evident across the global markets as China’s commitment to stimulate the domestic economy encouraged traders. The markets also have several Main Street catalysts to consider, including weekly jobless claims data and inflation measures from the second-quarter GDP report. A slew of Federal Reserve officials are due to make speeches, which could potentially offer clues toward the interest-rate trajectory.

Futures	Performance (+/-)
Nasdaq 100	+1.38%
S&P 500	+0.78%
Dow	+0.47%
R2K	+0.87%

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY climbed 0.79% to $574.55 and the Invesco QQQ ETF QQQ jumped 1.44% to $492.82, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks ended Tuesday’s session on a mixed note, as wary traders either stepped to the sidelines or took some profits off the table ahead of the flurry of data due over the next two days and Micron’s earnings that came out after the market closed. IT and utility stocks rose, while the remaining 11 sector classes pulled back. Energy and healthcare stocks were among the worst performers of the session.

The Nasdaq Composite ended marginally higher, advancing for a third straight session, while the S&P 500 Index and the Dow Industrials retreated from their record highs.

Index	Performance (+/)	Value
Nasdaq Composite	+0.04%	18,082.21
S&P 500 Index	0.19%	5,722.26
Dow Industrials	-0.70%	41,914.75
Russell 2000	+0.17%	2,223.99

Insights From Analysts:

The market could remain lackadaisical until the election, according to Fund Strat’s Tom Lee. The Fed rate cut is historically positive three to six months out but what stocks do in the next month is a bit of a coin flip, the strategist said in an interview with CNBC.

Some repositioning took place and the market is now looking ahead to the election, which is just 40 days away, he said.

Lee noted that most wealth managers and family offices he spoke to hinted at unwillingness to commit capital until after election day. “I don't think it matters who wins; It’s just they want to get that event behind,” he added.

The strategist said in election years, the November and December rallies are pretty tremendous, and when the gains are over 10% in the first half of the year, the November-December rallies get bigger, he said. “I am bullish into year-end but I'm a little less confident about how markets behave into election day and not that I think we're going to have a huge drawdown,” he added.

“I also don't think we can make new highs and then see the market blast off after election day. So I'd rather sort of say things look a lot better after election day,” Lee said.

A Morgan Stanley strategist looked ahead to what’s in store after the first rate cut in the current monetary policy cycle. Chief Investment Officer, Morgan Stanley Wealth Management, Lisa Shalett said corporate fundamentals will now need to come into sharper focus, though expectations are already ambitious.

Given this backdrop, she advised investors to consider reducing ultra-short and money market positions in favor of locking in longer-dated rates. The equal-weighted S&P 500 Index may provide better risk-adjusted exposure than its market-cap-weighted counterpart, she said. The strategist also flagged financial services, industrials, energy, healthcare and materials, as well as parts of technology such as software as compelling opportunities. Defensive ideas in residential REITs and utilities, and non-U.S. assets also could work in the current environment, she said.

See Also: How To Trade Futures

Upcoming Economic Data:

• The Labor Department is scheduled to release the customary jobless claims data at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment benefits to rise to 223,000 in the week ended Sept. 21, up from 219,000 in the previous week.
• The Commerce Department is due to release its durable goods orders report for August at 8:30 a.m. EDT. The consensus estimate calls for a 3% month-over-month drop in durable goods orders compared to a 9.8% jump in the previous month.
• The Bureau of Economic Analysis will release the final second-quarter GDP report at 8:30 a.m. EDT. The second-quarter growth is expected to be left unrevised at 3%.
• The National Association of Realtors is due to release its pending home sales index for August at 10 a.m. EDT. The consensus estimate is for a 1% month-over-month increase for August, reversing some of the 5.5% drop in the previous month.

Fed speeches scheduled for the day include:

• Fed Governor Adriana Kugler and Boston Fed President Susan Collins at 9:10 a.m. EDT
• Fed Governor Michelle Bowman at 9:15 a.m. EDT
• Fed Chair Jerome Powell at 9:20 a.m. EDT (at the 2024 U.S. Treasury Market Conference)
• New York Fed President John Williams at 9:25 a.m. EDT
•  Fed Vice Chair for Supervision Michael Barr at 10:30 a.m. EDT
• Fed Governor Lisa Cook at 10:30 a.m. EDT
• Minneapolis Fed President Neel Kashkari and Barr at 1 p.m. EDT

Stocks In Focus:

• Micron jumped over 15% in premarket trading following the company’s quarterly results announcement.
• Also moving on earnings are H.B. Fuller Company FUL (down about 9%), Jefferies Financial Group Inc. JEF (down over 5%) and Worthington Enterprises, Inc. WOR (up about 4%.
• Accenture plc ACN, CarMax, Inc. KMX and Jabil Inc. JBL are among the companies due to announce their financial results before the market opens.
• Those reporting after the close include BlackBerry Limited BB, Vail Resorts, Inc. MTN and Costco Wholesale Corporation COST.

Commodities, Bonds And Global Equity Markets:

Crude oil futures fell sharply and have dropped below the $69-a-barrel level, and gold futures pushed higher and are in record territory. Bitcoin BTC/USD has gained moderately and is approaching the $64K level. The 10-year Treasury note edged down slightly to 3.772%.

The global markets were in a sea of green, with Hong Kong, China and Japan closing notably higher, as sentiment received a boost from China’s stimulus announcements. To add to the buoyancy, Bloomberg reported that China is considering injecting up to 1 trillion yuan($142.39 billion) of capital into its biggest state banks to facilitate lending. The European markets also advanced strongly in early trading.

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