Wall Street Poised For Positive Start To Week, But Inflation Worries Loom: Analyst Points To Data Showing 'Clear Sign Of Buying Pressure'

U.S. stocks look to start a data-heavy week on a firm note, with the major index futures pointing to a modestly higher open in early trading. Given the lack of any meaningful catalysts, stocks may have to find inspiration elsewhere to keep the upward trajectory intact, while a slew of first-tier economic events lined up for the week could keep sentiment guarded.

Fund manager Louis Navellier said, “If Treasuries can stay under 4.50% and we keep getting decent economic data without any dramatic developments on the geopolitical front – which are impossible to predict ahead of time – most likely, equities are headed to new highs

Futures	Performance (+/-)
Nasdaq 100	+0.18%
S&P 500	+0.11%
Dow	+0.12%
R2K	+0.25%

Cues From Last Week

Some positive earnings reports and mostly benign economic data that added weight to Fed rate-cut expectations catalyzed an upward move by the market in the week ended May 10th. Navellier attributed the strength in part to the Treasury refinancing, which went on well, including the $25 billion auction of 30-year Treasury bonds on Thursday.

One of the reasons for the strong auction was the dip in inflation around the world. “China is in the midst of deflation. Meanwhile, the European Central Bank and the Bank of England are going to be cutting in June, so rates are falling around the world while our rates still look very good,” he said.

The Dow Industrials rose for an eighth straight session, with the 30-stock blue-chip average and the S&P 500 Index closing at the highest level since April. The Dow had its best week since December, according to CNBC.

While the Dow rose for four consecutive weeks, the S&P 500 and the Nasdaq Composite are on a three-week winning streak.

Index	Weekly Performance (+/-)	Value
Nasdaq Composite	+1.14%	16,340.87
S&P 500 Index	+1.85%	5,222.68
Dow Industrials	+2.17%	39,512.84
Russell 2000	+1.18%	2,059.78

Insights From Analysts:

While some call for a potential market correction, the market is telling a different take, said Carson Group’s Ryan Detrick. He noted for three days on the trot, more than 74% of NYSE-listed stocks advanced, he said, adding that this was a “clear sign of buying pressure.”

Going back to 2000, when this occurred, the S&P 500 Index was higher a year later every time and the average gain was 23%, he said.

Same old🐻s are telling us a recession and bear market are near.

Good news? The market is telling us it isn't true.

We just saw 3 straight days of >74% NYSE advancers, a clear sign of buying pressure.

Since 2000, S&P 500 higher a yr later every time and up almost 23% on avg. pic.twitter.com/aySbHciATs

— Ryan Detrick, CMT (@RyanDetrick) May 12, 2024

Upcoming Economic Data:

Fed speeches will once again dominate proceedings on Main Street, although the consumer price inflation report for April due on Wednesday could be the most important piece of economic evidence of the week.

The April producer price inflation report is due on Tuesday, the April retail sales report is due on Wednesday, and a couple of manufacturing and housing market data could also draw some attention.

On Monday, Fed Vice Chair Philip Jefferson and Cleveland Fed President Loretta Mester would participate together in a panel discussion due at 9 a.m. EDT.

The New York Fed is scheduled to release the results of its consumer inflation expectations survey for April at 11 a.m. EDT. The March survey showed median one-year-ahead inflation expectations remaining unchanged at 3%.

The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

• GameStop Corp. GME rallied about 18% in premarket trading, riding on the upward momentum seen since late April. The climb could also be attributable to Keith Gill, whose social-media handle is Roaring Kitty, posted on the X platform for the first time in three years. Gill spearheaded the meme mania seen in 2021, with shares of companies, including GameStop capitalizing on the frenzy.
• AMC Entertainment Holdings, Inc. AMC rebounded by over 7% following its post-earnings dip seen last week.
• Notable among the companies reporting earnings are Tencent Music Entertainment Group TME, Agilysys, Inc. AGYS, and StoneCo Ltd. STNE.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures, which were flattish with a slight negative bias in the week ended May 10, rose modestly on Monday, while gold futures slid over 1%. The 10-year Treasury note yield eased and held below 4.5%.

Bitcoin BTC/USD rose over 2.80% and traded under the $63,000 level.

The major Asian markets traded on a mixed note, as traders awaited the U.S. inflation data. Following the release of mixed China inflation data, the domestic market retreated. European stocks opened on a weak note, with the Euro STOXX 50 Index down about 0.22% at the last check.

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Photo via Reto Keller from Pixabay