Wall Street Looks Jaded After Record Run As Traders Shift Focus To Retail Sales Data, Fed Speeches: 'FOMO Still Rules The Market For AI-Related Stocks,' Says Analyst

Tech optimism hasn’t worn out yet, with the Nasdaq futures pointing to a strong start for these stocks, while the Dow and S&P 500 futures were modestly lower. Sentiment going into the session will largely hinge on the retail sales report that is due ahead of the market open and a slew of speeches by Federal Reserve officials. Traders may also keep an eye on the Congressional Budget Office’s updated fiscal-year budge. Analysts are confident of the upward momentum carrying the market through the year, premising their optimism on the likelihood of Fed rate cuts amid easing inflation and the artificial intelligence-driven rally accelerating.

The main risk the market faces now is the concentration of the market rally. Fund Manager Louis Navellier allayed the concern and said market breadth will likely return. “With interest rates likely to eventually fall, and perhaps geopolitical easing as well, hopefully the rest of the market can start to perform better and improve the breadth of returns,” he said.

Futures	Performance (+/-)
Nasdaq 100	+0.20%
S&P 500	-0.01%
Dow	-0.03%
R2K	-0.28%

Technology stocks spearheaded the market’s rally on Monday, as the Nasdaq Composite and the S&P 500 indices notched up fresh record closing and intraday highs. The Dow Jones Industrial Average snapped a three-session losing streak and ended moderately higher for the session.

Stocks started on a mixed note but sentiment became uniformly positive as traders digested the optimistic forecasts issued by market strategists. They launched into a steadily rally over the course of the session before ending firmly in the green.

A majority of S&P 500 sectors advanced, with the exception of the defensive utility, real estate and healthcare stocks. IT, consumer discretionary and industrial stocks led the market’s advance on Monday.

Index	Performance (+/-)	Value
Nasdaq Composite	+0.95%	17,857.02
S&P 500 Index	+0.77%	5,473.23
Dow Industrials	+0.49%	38,778.10
Russell 2000	+0.79%	2,022.01

Insights From Analysts:

Wharton Professor Jeremey Siegel, senior economist at WisdomTree said the Fed’s message is loud and clear. “Fed cuts are contingent on continued positive inflation trajectories that I expect to materialize,” he said in his weekly commentary.

The economist, however, sounded a note of caution to investors. “Overall, the market is navigating through a complex set of economic indicators. We believe investors should remain vigilant and diversified in their investment approaches, particularly considering the narrow focus of recent market rallies around specific tech stocks, which may not be sustainable in the long,” he said.

“FOMO still rules the market for AI-related stocks.”

Carson Group’s Chief Market Strategist Ryan Detrick painted a very positive picture for the market, drawing inspiration from historical trend. In a post on X, formerly Twitter, he noted that Monday’s S&P 500 performance marked the 30th record closing highs for the index this year. This has happened 20 times previously and each of the time, the index has finished the year in the green, he said. The average and median gains for the index in those years are 19.6% and 19.5%, respectively, he added.

With a green close today, that'll be 30 ATHs for the S&P 500 in '24.

Happened 20 other times and the finished the yr green each time (not all that surprising).

Avg return 19.6% and median return 19.5%. pic.twitter.com/XI24AZ6vM5

— Ryan Detrick, CMT (@RyanDetrick) June 17, 2024

• The Commerce Department is due to release its retail sales report at 8:30 a.m. EDT. Economists, on average, expect retail sales to rise 0.2% month-over-month in May compared to unchanged sales in the previous month. Core retail sales, excluding autos, are expected to show 0.2% growth, the same pace as in the previous month.
• The Federal Reserve will release the May industrial production report at 9:15 a.m. EDT. The month-over-month industrial output growth is estimated at 0.4% following an unchanged output in April.
• The Commerce Department’s business inventories report, due at 10 a.m. EDT, may show a 0.3% month-over-month increase for May, reversing part of the 0.1% drop in April.
• The Treasury is scheduled to auction 20-year bonds at 1 p.m. EDT
• Congressional Budget Office will release its updated fiscal year budget forecast at 2 p.m. EDT.
• Among the Fed speeches scheduled for the day are
  • Richmond Fed President Tom Barkin (podcast interview) at 10 a.m. EDT.
  • Fed Governor Adriana Kugler and Dallas Fed President Laurie Logan at 1 p.m. EDT
  • Boston Fed president Susan Collins at 11:40 a.m. EDT
  • St. Louis Fed President Alberto Musalem at 1:20 p.m. EDT
  • Chicago Fed President Austan Goolsbee at 2 p.m. EDT

See Also: How To Trade Futures

Stocks In Focus:

• La-Z-Boy Incorporated LZB climbed over 10% in premarket trading following the company’s earnings announcement, while Lennar Corp. LEN slid over 3% on earnings.
• Patterson Companies, Inc. PDCO and KB Home KBH are among the notable companies due to report earnings on Tuesday.
• Broadcom, Inc. AVGO extended its climb and was up about 3% in premarket trading.
• NextEra Energy, Inc. NEE fell over 6% on the news of an equity-unit offering by the company.
• EV stocks could be in focus after Fisker, Inc. FSRN filed for bankruptcy protection.

Commodities, Bonds And Global Equity Markets:

Crude oil futures retreated modestly after Monday’s 2%+ rally and gold futures were seen extending the declines. The 10-year benchmark U.S. treasury yield rose 1.3 basis points to 4.29%.

Bitcoin BTC/USD was little changed around the $65.5K level.

Among equity markets, Asian stocks closed mostly higher, led higher by the Australian and Taiwanese market. Australia’s key averages rallied after the nation’s central bank opted to keep rates on hold, in line with expectations. Governor of the Reserve Bank of Australia Michele Bullock, however, offered hawkish commentary in the press conference that ensued/

European stocks firmed up in early trading as traders in the region digested the May inflation data, which came in line with preliminary estimates released in May. The month-over-month inflation in the euro area came in at 0.2% and the year-over-year rate rose two-tenths of a point to 2.6%.

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