S&P 500; US Indexes Fundamental Daily Forecast – Mixed Trade as Earnings Season Winds Down

The major U.S. stock indexes are trading mixed shortly after the cash market opening. Earlier in the session, the indexes hit new record highs, but there was very little follow-through. The lack of guidance today with earnings season winding down may be giving investors an excuse to book profits.

Early in the session, the benchmark S&P 500 Index is being helped by a strong gain in Royal Caribbean stock. The blue chip Dow Jones Industrial Average is being underpinned by shares of Dow DuPont. The NASDAQ Composite is flat-lining early in the session.

With earnings season coming to an end, the focus for investors shifted to corporate takeover news on Monday.

As of Tuesday morning, nearly 85 percent of the S&P 500 had reported with 74 percent of those companies surpassing earnings expectations, according to FactSet.

The major U.S. equity indexes hit record highs on Monday as sentiment on Wall Street shifted away from earnings to merger and takeover talk.

Qualcomm rose percent and Broadcom jumped 1.4 percent after Broadcom offered to buy fellow chip maker Qualcomm for $103 billion. If completed, the deal would be the biggest in the history of the tech sector. In other related news, shares of Advanced Micro Devices also surged on merger talk, while shares of Disney and 21^st Century Fox also rose. 21^st Century Fox is apparently up for sale.

Forecast

On Tuesday, investors will get the opportunity to react to a handful of minor reports. IBD/TIPP Economic Optimism and the JOLTS Job Opening reports will be released at 1500 GMT. This is followed by a speech from FOMC Member Randal Quarles. He is expected to talk about banking regulations. Fed Chair Janet Yellen will deliver a speech at 1930 GMT. The day ends with a report on Consumer Credit.

The early price action suggests the market may be ripe for a short-term correction. This is not likely to lead to a change in trend, but it could trigger a 2 to 3 day break that would alleviate some of the tension in the overextended rally.

With the Fed likely to raise rates in December and earnings season ending, between now and the end of the year, all investors will have to worry about is tax reform and this is not a sure thing.