Stock futures stable; Dow, S&P 500, Nasdaq show slight changes.
IT sector drives rally; S&P 500 hits first-time 5,000 mark.
Key CPI, PPI data and corporate news to shape market direction.
U.S. Stock Futures Stable After Record Week
Early Monday, U.S. stock futures showed minimal changes following a historic week for the S&P 500. The futures tied to the S&P 500 remained nearly unchanged, while Dow Jones Industrial Average futures declined slightly by 0.1%, and Nasdaq 100 futures also showed no significant movement.
Last Session’s Performance and Ongoing Winning Streak
The S&P 500 marked a notable increase of 0.57% last session, closing above the significant 5,000 mark for the first time. The tech-heavy Nasdaq Composite also climbed by 1.25%. Conversely, the Dow Jones Industrial Average ended marginally lower. These major averages are continuing a five-week streak of gains, with a consistent rise observed in 14 out of the past 15 weeks.
Market Trends: IT Sector Leading the Rally
The rally to fresh highs was primarily driven by the IT sector, notably including the ‘Magnificent Seven’, which contributed significantly to the gains. The equal-weighted S&P 500, however, registered a more moderate increase.
Upcoming Earnings Reports
The market is poised for earnings reports from 61 S&P 500 companies this week, spanning diverse sectors from the gig economy to traditional consumer goods. Companies like Lyft, Instacart, DoorDash, AutoNation, Kraft Heinz, Hasbro, and Coca-Cola are set to release their financial results.
In corporate news, Diamondback Energy’s announced merger with Endeavor Energy, valued at around $26 billion, is a significant development. This transaction is expected to conclude in the fourth quarter of 2024.
Looking ahead, the market appears poised for continued growth, albeit with potential fluctuations. With the CPI and PPI data releases, market sentiment could shift, particularly if these figures align with bullish expectations. T
he anticipation of Federal Reserve and ECB rate cuts may also play a crucial role in determining market trends in the coming months. This period may see some market consolidation as investors seek clarity on these economic indicators.
The S&P 500 is projected to reach around 5,500 by year-end, indicating a potential rise of 9%. However, this ascent might be gradual, with the index possibly hovering around the 5,000 to 5,100 range in the near term, pending greater clarity on monetary policy changes.
Daily E-mini S&P 500 Index
The E-mini S&P 500 Index is nearly flat during the pre-market session on Monday. Nonetheless, it remains within striking distance of a new all-time high.
Taking out 5048.50 will signal a resumption of the uptrend with no visible resistance in sight. A trade through 5013.00 will make 5048.50 a new minor top. We have not seen this chart pattern since January 30-31. This will be the first sign of potential weakness in nearly two-weeks.
Intermediate-term investors are worried about an ovebought market with the spread between the current price at 5043.75 and the 50-day moving average at 4818.90 widening nearly everyday.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.