S&P 500; US Indexes Fundamental Daily Forecast – Will Tax Reform Uncertainty Control the Trade Today?

U.S. stock index futures are expected to open higher based on the pre-market trade. The indexes are recovering from early session weakness as investors prepare for fresh economic data and a few earnings reports.

In the pre-market futures markets, the benchmark December E-mini S&P 500 Index is trading 2601.25, up 0.25 or +0.01%. The blue chip December E-mini Dow Jones Industrial Average is at 23522, up 5 or +0.02% and the tech-based December E-mini NASDAQ Composite is trading 6416.00, up 2.50 or 0.04%.

In economic news, U.S. New Home Sales are expected to show a 627K increase versus the previous month’s increase of 667K.

Additionally, Minneapolis Fed President Neel Kashkari will be delivering a speech. He is dovish on interest rates so investors will be interested to hear how he feels about the upcoming December rate hike and the number of expected rate hikes in 2018.

New York Fed President William Dudley is expected to be at a moderated conversation called “U.S. Economy:  10 Years after the Crisis,” organized by the University of California, Berkeley, in New York. Investors will be watching each discussion closely for any comments about the state of the U.S. economy.

Investors will also be paying close attention to how the retail sector performs today as the Cyber Monday shopping spree commences.

Forecast

The price action today will once again be driven by momentum. The strongest upside momentum is in the S&P 500 Index and the NASDAQ. The Dow is lagging the other two indexes.

The S&P 500 Index and the NASDAQ futures contracts both reached new contract highs earlier in the session. Although traders are looking for a firm opening, sellers could take control later in the session if the markets turn lower for the day. This would put the markets in a position to post major closing price reversal tops. This could trigger the start of a 2 to 3 day correction.

Investors will also be watching the activity in the Senate where they will be discussing tax reform. The Senate is expected to vote on this matter on November 30 and according to reports, this is not a done deal. Prices could plunge later in the week if the tax reform bill doesn’t pass on the first attempt because they could lead to a prolonged, dragged out process.