Zinger Key Points
- The market faces a stern test as a slew of key economic data and Fed speeches are lined up for the week.
- If January CPI data shows continued easing, strong inflows into the market is likely, LPL Financial says.
- Get New Picks of the Market's Top Stocks
Caution returns to Wall Street after Monday’s solid showing by stocks. The index futures point to a higher opening, although sentiment will largely hinge on the January consumer price inflation report due ahead of the market opening.
Cues From Monday’s Trading:
Bargain hunting propped stocks on Monday as traders indulged in buying after a down week. The positive close also reflected optimism regarding a further letup in inflationary pressure in January.
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After opening higher, the indices rose steadily till early afternoon trading before embarking on a consolidation move. The Dow Industrials reclaimed the 34,000 level and closed at a one-month high.
The market witnessed broad-based strength on Monday, with only energy stocks coming under selling pressure. Particularly, technology and consumer discretionary stocks saw strong buying interest.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | +1.48% | 11,891.79 | |
| S&P 500 Index | +1.14% | 4,137.29 | |
| Dow Industrials | +1.11% | 34,245.93 |
Analyst Color:
The market faces a series of potential tackles, including inflation data, retail sales, industrial production, earnings reports and a parade of Fed speakers, said Quincy Krosby, chief global strategist at LPL Financial.
“Should the inflation reports indicate that the downward pace of inflation is accelerating, the markets could see strong inflows leading to a surge in short covering activity that pushes and keeps the S&P 500 back over 4,100, a key level for traders and investors alike, while underpinning optimistic market sentiment,” he said.
LPL’s Chief Equity Strategist Jeffrey Buchbinder said the 14% move for the S&P 500 off the lows last October, despite the weakening earnings outlook, clearly tells us the market is pricing in a more optimistic outlook for the economy and corporate profits. The rising odds of a soft landing justify the move, he added.
Futures Today
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | +0.37% | |
| S&P 500 Futures | +0.25% | |
| Dow Futures | +0.11% | |
| R2K Futures | +0.09% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY rose 0.26%, to $413.91, and the Invesco QQQ Trust QQQ gained 0.43%, to $305.81, according to Benzinga Pro data.
Upcoming Economic Data:
OPEC is scheduled to release its monthly oil market report at 7 a.m. EST.
The Bureau of Labor Statistics will release its consumer price inflation report for January at 8:30 a.m. EST. The month-over-month changes in the CPI and core CPI are expected at 0.5% and 0.4%, respectively. This compares to December rates of 0.1% and 0.4%, respectively.
The annual rate of the CPI is expected to ease from 6.4% to 6.2%, while the annual core CPI rate may have eased from 5.7% to 5.5%.
The Redbook index, a sales-weighted index of year-over-year same-sales growth in a sample of large U.S. general merchandise retailers, is scheduled to be released at 8:55 a.m. EST.
The Cleveland Fed is expected to release its consumer price inflation data at 11 a.m. EST.
Among the Fed speakers due to make public appearances for the day are Dallas Fed President Lorie Logan (11 a.m. EST), Federal Open Market Committee member and Philadelphia Fed President Patrick Harker (11:30 a.m. EST) and FOMC member and New York Fed President John Williams (2:05 p.m. EST).
Stocks In Focus:
- Palantir Technologies Inc. PLTR jumped about 18% in premarket trading after it reported its first profitable quarter.
- Nvidia Corp. NVDA climbed 1%, extending its recent gains on optimism over AI technology.
- Ford Motor Company F announced that it is cutting 3,800 jobs in Europe amid its electrification drive.
- Dow component Coca-Cola Company KO, GlobalFoundries Inc. GFS, Marriott International Inc. MAR and Airbnb Inc. ABNB are among the companies due to release their quarterly results ahead of the market open.
- Notable companies reporting after the market close include Akamai Technologies Inc. AKAM and TripAdvisor Inc. TRIP.
Top Analysts’ Call
- Occidental Petroleum OXY: Goldman Sachs upgrades from Neutral to Buy with an $81 price target.
- Shopify Inc. SHOP: KeyBanc Capital Market reiterates Overweight rating and raises price target from $45 to $55
- Fidelity National Information Services Inc. (FIS): Morgan Stanley upgrades from Equal-Weight to Overweight and raises price target from $73 to $79
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures were trading lower for a second straight day, with a barrel of WTI-grade crude oil fetching $78.97, down 1.46%. Meanwhile, the yield on the benchmark 10-year U.S. Treasury note slipped below the 3.7% level and traded down 0.025 percentage points to 3.694%.
Most Asia-Pacific markets closed Tuesday’s session higher, tracking the positive close by Wall Street stocks overnight. Japan’s Nikkei 225 average advanced after data showed that the economy averted a recession in the fourth quarter. The growth, however, was slower than expected.
On the other hand, the Hong Kong and Singaporean markets closed modestly lower.
European stocks opened Tuesday’s session higher and have rallied further in late morning trading.
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