Nasdaq Index, Dow Jones, S&P 500 News: Riding Bullish Optimism Ahead of CPI

Key Points

• Marginal Gains in S&P 500 and Dow Jones, Nasdaq Climbs
• Hershey Falls Post-Downgrade, Diamondback Rises on Acquisition News
• S&P 500’s Bullish Trend Continues, Eyes Set on 5,300

Stock Market Performance

U.S. stocks began the week slightly better after the first hour of trading, following a historic week that saw the S&P 500 close above 5,000 for the first time. The index, alongside the Dow Jones Industrial Average, edged marginally higher. The Nasdaq Composite also saw gains.

At 16:00 GMT, the Dow is trading 38732.46, up 60.77 or +0.16%. The S&P 500 Index is at 5033.45, up 6.84 or +0.14% and the Nasdaq-100 Index is trading 16036.78, up 46.12 or +0.29%.

Key Stocks in Focus

Several stocks made notable moves in the premarket. Hershey declined by more than 2% following a downgrade by Morgan Stanley, citing soft demand and high cocoa inflation. Conversely, Diamondback Energy surged 7% on news of its acquisition of Endeavor Energy Partners. Salesforce and Teva Pharmaceutical Industries also experienced significant shifts in stock prices.

Historical S&P 500 Milestone

The S&P 500 achieved a significant milestone by not experiencing a 2% pullback for over 70 trading days, indicating sustained market strength. This resilience is coupled with the fifth consecutive week of gains for major averages, highlighting a robust performance since the start of the year.

Corporate Earnings and Consumer Data

Investors are anticipating a busy week ahead with 61 S&P 500 companies scheduled to report earnings. Notable names include Lyft, Instacart, DoorDash, AutoNation, Kraft Heinz, Hasbro, and Coca-Cola. Additionally, key economic data such as the consumer price index (CPI), retail sales, production, imports and exports, housing starts, and the producer price index (PPI) are expected.

Market Forecast

The U.S. stock market exudes a strongly bullish sentiment for the short term, buoyed by a well-supported rally. Analysts project a robust performance for the S&P 500, maintaining its current levels with the potential to ascend towards the 5,300 mark, assuming favorable economic conditions of vigorous growth and subdued inflation.

This optimistic scenario particularly favors small-cap stocks, given their heightened sensitivity to monetary policy shifts. In the upcoming weeks, the market is poised to maintain its upward trend, with a close focus on forthcoming inflation data, which will be pivotal in shaping market direction. Overall, the momentum indicates a bullish phase, with expectations for sustained gains in the near future.

Technical Analysis

The E-mini S&P 500 Index is edging higher as it approaches the mid-session on Monday. The benchmark has also hit a new record high in the process.

A trade through 5013.00 will make 5054.25 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.

Following the prolonged rally in terms of price and time, a lower close today would be the first sign that the selling is greater than the buying at current price levels.

Intermediate-term investors are worried about an ovebought market with the spread between the current price at 5053.75 and the 50-day moving average at 4818.90 widening nearly everyday.