S&P500 and Dow Jones: US Stocks Rise in Premarket Ahead of Retail Sales and Earnings

Stocks Edge Higher as Two-Day Rally Extends

The major U.S. stock index futures are edging higher in mixed trade ahead of the cash market opening. Investors are looking to build on two straight days of gains that saw them shift from worrying about AI-related stocks late last week to facing record highs today.

At 11:50 GMT, Dow Futures are trading 50242.00, up 23.00 or +0.05%. S&P 500 Futures are at 6989.75, up 6.50 or +0.09% and Nasdaq Futures are trading 25361.25, up 7.25 or +0.03%.

Tech Snaps Back After Getting Too Cheap

Last week, the focus was on a rotation out of tech stocks and into old economy stocks, sending the blue-chip Dow Jones Industrial Average to a record high. Friday and Monday’s action suggests tech stocks just got too cheap to ignore, with aggressive investors buying them with both hands. Fear around AI replacing software dragged tech-related stocks lower, especially megacap issues that were also hurt by worries about excessive spending. But all of that pressure seems to be in the rearview mirror because the market failed to take out any key technical levels on the chart.

Once again, sellers drove the benchmark S&P 500 Index under the 50-day moving average, only to have bargain-hunters gobble up cheap shares and regain the 50-day trend indicator. This has been a reliable indicator for months for the “buy the dip” crowd.

This type of price action tells me that investors have accepted the choppy trade scenario after trending most of the time the past two years. Now traders are being especially selective by dumping losers quickly and recognizing value when stocks sell off.

Today’s Catalysts: Earnings and Retail Sales

Moving on to potential catalysts today, Coca-Cola is scheduled to report before the open on Tuesday. Hasbro and Spotify are also on tap. Coca-Cola is a key component of the Dow and S&P 500. CVS topped quarterly estimates, reaffirming its profit outlook as its turnaround plan takes effect.

On the economic front, retail sales will be released Tuesday morning. These numbers will be helpful to the Fed as a gauge of consumer spending, but the majority of traders will be eyeing Wednesday’s Non-Farm Payrolls report and Friday’s CPI data, which will have greater impacts on Fed policy and interest rates.

Early premarket movers include ON Semiconductor (-6.00%), Upwork (-22.00%), Chegg (-5.00%), Aecom (+3.00%), and Cincinnati Financial (-1.00%).

Technical Picture: 50-Day MA Holds Again

E-mini S&P 500 Index futures are edging higher early Tuesday, attempting to pull away from the 50-day moving average support at 6937.55. Additional support is the short-term retracement zone at 6931.75 to 6897.25. On the upside, potential targets are a top at 7027.25 and the record high at 7043.00.

Based on the price action since late December, the 50-day moving average is the key to sustaining the uptrend. However, traders haven’t panicked when it’s violated, suggesting “buy the dip” is still the active strategy. It also indicates that investors are using the 50-day MA as a trend gauge, but not fixed support. They may actually be viewing the 200-day moving average as the major support and trend indicator. It is at 6594.25 today and not even in the short-term picture.

More Information in our Economic Calendar.