Nasdaq Index, Dow Jones, S&P 500 News: Treading Cautiously as Rate Cut Hopes Dim

Key Points

• S&P 500 records a slight decline post Wall Street highs.
• Palantir and NXP Semiconductors outperform in earnings.
• Eli Lilly’s report in focus, market eyes Fed policy.

Wall Street’s Pullback

The major U.S. stock index futures markets are exhibiting little change on Tuesday in the wake of a Wall Street retreat from record highs. The sell-off was primarily driven by heightened bond yields and skepticism over the Federal Reserve’s potential rate cuts.

The S&P 500 witnessed a 0.32% dip on Monday, a reversal from its peak performance the previous week. This shift followed Federal Reserve Chair Jerome Powell’s assertion on “60 Minutes” that a rate cut in the March meeting seems improbable, propelling the 10-year Treasury yield to 4.16%.

At 11:55 GMT, blue chip Dow futures are trading 38420.00, down 46.00 or -0.12%. Benchmark S&P 500 Index futures are at 4955.75, down 6.25 or -0.13% and tech-heavy Nasdaq-100 Index futures are trading 17677.50, down 22.50 or -0.13%.

Key Company Performances

In the corporate sphere, Palantir Technologies saw an 18% surge in shares after surpassing fourth-quarter revenue expectations, reporting $608.4 million against the projected $602.4 million. NXP Semiconductors also exceeded forecasts, with a 2% rise post-announcing higher-than-anticipated fourth-quarter outcomes. On the other hand, Chegg’s shares fell by 1% following a lower-than-expected revenue guidance for the upcoming quarter.

Earnings Season Midpoint

The earnings season is at its midpoint, with significant companies like Eli Lilly, Spirit AeroSystems, DuPont, Amgen, Chipotle Mexican Grill, and Ford scheduled to report their quarterly results. Eli Lilly is particularly in focus, with analysts predicting a revenue of $9.0 billion, driven by its entry into the weight-loss drug market.

Upcoming Economic Indicators

Attention now turns to upcoming economic indicators, including the New York Fed’s household debt and credit report. Speeches from central bank figures like Cleveland Fed President Loretta Mester and Boston Fed President Susan Collins are also anticipated. Investors remain cautious, balancing their investment strategies amid uncertain market conditions and Fed rate cut expectations.

Short-Term Market Forecast

Considering the current market scenario, short-term forecasts appear bearish. The market’s ability to maintain its rally is questionable, especially with concerns over the Fed’s rate cut strategy and the challenge of achieving double-digit earnings growth. Investors, while engaged, express a sense of apprehension about the near future.

Technical Analysis

E-mini S&P 500 Index futures are edging slightly lower on Tuesday with traders still dealing with valuation issues. The current price at 4958.25 is well above the rising 50-day moving average at 4785.27, making some investors nervous.

Essentially, it all comes down to investor preferences: Buy strength at current over-extended price levels, or play for a pullback into the intermediate trend indicator, currently at 4785.30.