After Tuesday’s brutal sell-off, sentiment continues to remain unsettled. The index futures point to indecision and a lack of conviction among traders on Wednesday as they look ahead to more Main Street cues.
Cues From Tuesday’s Trading:
U.S. stocks closed Tuesday on a markedly negative note, as traders digested a spike in treasury yields, lifted by a business activity reading that came in stronger than expected, and Walmart Inc.'s WMT weak forward commentary.
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All three major averages retreated to one-month lows, with the S&P 500 Index breaking below key support around 4,100 and the psychological barrier of 4,000. The 30-stock Dow Industrials is now in the red for the year.
The sell-off was broad-based, with only energy and consumer staple stocks scrapping through with more modest losses.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | -2.50% | 11,492.30 | |
| S&P 500 Index | -2.00% | 3,997.34 | |
| Dow Industrials | -2.06% | 33,129.59 |
Analyst Color:
Notwithstanding the S&P losing key support levels, the uptrend off the October lows remains intact, said LPL Chief Technical Strategist Adam Turnquist. A close below 3,940 would be required to break the uptrend and the longer-term 200-day moving average, he added.
“The bulls will need to defend this level in order to continue their equity market recovery narrative,” Turnquist said. He also noted that despite the back-to-back weekly declines and Tuesday’s sharp sell-off, over half of the S&P 500 Index is holding above their respective 200-day MAs.
“Rising rates due to the market’s repricing of a potentially higher for longer monetary policy path have weighed on risk appetite. Benchmark 10-year Treasury yields have now cleared key resistance at 3.90%, elevating upside risk in yields, which will likely continue to weigh on equities,” the analyst said.
Futures Today
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | -0.06% | |
| S&P 500 Futures | -0.07% | |
| Dow Futures | -0.04% | |
| R2K Futures | -0.33% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.07%, to $398.83, and the Invesco QQQ Trust QQQ edged down 0.09%, to $293.76, according to Benzinga Pro data.
Upcoming Economic Data:
The Mortgage Bankers Association is scheduled to release its weekly mortgage applications volume data at 7 a.m. EST. In the week ended Feb. 10, mortgage applications volume fell 7.7% on a seasonally adjusted basis. After five straight weeks of declines, the 30-year fixed rate rose 21 basis points to 6.39%.
The Treasury Department is due to auction 5-year notes at 1 p.m. EST.
The Federal Reserve is due to release the minutes of the Federal Open Market Committee meeting held between Jan. 31 and Feb.1. At the meeting, the Fed opted to slow down the pace of the hike to 25 basis points. Traders are likely to sift through minutes to get clues about the rate trajectory in the near term.
Stocks In Focus:
Palo Alto Networks Inc. PANW climbed close to 10% in premarket trading following its quarterly results.
Toll Brothers Inc. TOL rose over 3.80%, reacting to its forecast-beating quarterly results.
Baidu Inc. BIDU rallied about 7% after the Chinese search reported its fourth-quarter results.
Garmin Ltd. GRMN, Stellantis NV STLA, TJX Companies Inc. TJX and Overstock.com Inc. OSTK are among the notable companies reporting ahead of the market open.
Key companies reporting after the bell include Nvidia Corp. NVDA, Lucid Group Inc. LCID, Fidelity National Financial Inc. FNF, Matterport Inc. MTTR, eBay Inc. EBAY and Etsy Inc. ETSY.
Top Analysts’ Call
Block Inc. SQ: KeyBanc Capital Markets maintains Overweight rating and raises price target from $90 to $100.
Coinbase Global Inc. COIN: CANACOORD Genuity maintains Buy rating and lowers price target from $120 to $100.
Palo Alto Networks: KeyBanc maintains Overweight and raised price target from $210 to $230.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures were seen extending their losses on Wednesday. A barrel of WTI-grade crude oil traded down about a percentage point at $75.66. Meanwhile, the yield on the benchmark 10-year U.S. Treasury hovered around 3.95%.
The Asia-Pacific markets fell across the board on Wednesday, dragged by the negative lead from Wall Street overnight. The Japanese, Indian, South Korean and Taiwanese markets were among the worst decliners from the region.
European stocks have extended their slide and were trading notably lower in late morning trading on Wednesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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