NASDAQ 100, Dow Jones, S&P 500: Mixed Trade Following Last Week’s Surge as Oil Prices Jump

Highlights

• Oil prices surge initially on Saudi Arabia’s output cut.
• Strong jobs data boosts stock market momentum.
• Debt ceiling bill signed into law, providing market stability.

Overview

U.S. equity futures are showing a mixed performance on Monday morning, following last week’s impressive rally that propelled the S&P 500 to its highest level since August. Meanwhile, oil prices experienced a brief surge after Saudi Arabia’s announcement of further production cuts.

At 07:48 GMT, blue chip Dow Jones Industrial Average futures are trading 33871.00, up 54.00 or +0.16%. Benchmark S&P 500 Index futures are at 4291.50, up 3.50 or +0.08%. Tech-heavy Nasdaq futures are trading 14571.00, down 4.25 or -0.03%.

Oil Prices React to Saudi Arabia’s Output Cut

During a meeting of OPEC and its allies, the decision was made to maintain the existing 2023 production targets. As a result, oil prices initially experienced a slight decline on Sunday evening. However, Brent and U.S. West Texas Intermediate futures eventually traded around 1% higher.

Strong Jobs Data Boosts Stock Market

On Friday, stocks rallied at the end of the week, driven by robust jobs data for May. The Dow experienced its best day since January, surging 701.19 points (2.12%), while the S&P 500 rose 1.45% and the Nasdaq Composite climbed 1.07%. This positive momentum marked the sixth consecutive weekly advance for the Nasdaq.

Debt Ceiling Bill Signed into Law

Over the weekend, President Joe Biden took action by signing the debt ceiling bill into law. This decisive move successfully averted the potential catastrophe of a U.S. government default. As a result, investors’ concerns were alleviated, and the market gained much-needed stability.

Investors are closely monitoring several factors. These factors encompass the performance of oil prices subsequent to Saudi Arabia’s output cut, the positive market sentiment driven by robust jobs data, and the implications of enacting the debt ceiling bill into law.

Market Watch: Economic Data, Earnings

In the week ahead, market participants are eagerly observing market breadth for signs of improvement. They are also anticipating the release of crucial economic data and earnings reports from prominent companies.

Traders will be closely monitoring the upcoming PMI data, factory orders, and durable goods figures.

Despite a relatively light schedule following a busy month of first-quarter earnings, investors can look forward to gaining valuable insights into food pricing and demand through the upcoming reports. These reports will include updates from J.M. Smucker, Campbell Soup, and United Natural Foods. Additionally, the eagerly anticipated results from Stitch Fix, Signet Jewelers, and DocuSign will further capture investors’ attention.

Short-Term Forecast

The labor market’s continued strength and persistent levels of personal consumption are expected to delay the potential recession in the economy. As long as employment remains stable, it mitigates the risk of a recession. Additionally, investors are actively monitoring a narrow stock market rally dominated by a few tech stocks. If market breadth fails to improve, it may indicate an imminent intermediate-term correction.