US Stock Market Futures Retreat at Start of New Week Amid Earnings Uncertainty and Recent Gains
WHAT YOU SHOULD KNOW
- US stock market futures retreated at the start of the new week due to uncertainty surrounding fourth-quarter earnings reports.
- Last week, the major indices all ended the day at one-month highs, with the Dow Industrial having the strongest performance.
- Analysts are expecting a 3.9% earnings decline year-over-year for the S&P 500.
The U.S. index futures market appears to be off to a sluggish start this week, following a strong performance in the week ending January 13th.
Traders are exhibiting a cautious attitude as they anticipate the fourth-quarter earnings reports to provide them with trading signals.
Last week, the stock market experienced a strong surge as investors began to anticipate a 25 basis point increase at the February meeting and a possible pause afterward. This expectation was further supported by the December inflation report released on Thursday, which showed that inflation was in line with expectations and had cooled off.
The three major indices all ended the day at one-month highs, with the Nasdaq Composite, S&P 500, and the Dow Industrial all posting gains. The Dow Industrial had the most robust performance, reaching its highest level since early December.
As the fourth-quarter reporting season begins to take shape, the financial world is eagerly awaiting the results. According to FactSet, the S&P 500 is projected to experience a 3.9% earnings decline year-over-year. In contrast, Brad MacMillan, Chief Investment Officer of Commonwealth Financial Network, is expecting an earnings gain instead of a drop.
He argued that despite the pessimistic forecasts of analysts and the multiple headwinds, there is still potential for growth and the fundamentals remain strong.
On Tuesday, the SPDR S&P 500 ETF Trust (SPY) saw a decrease of 0.29% to $397.36 in premarket trading, while the Invesco QQQ Trust (QQQ) dropped 0.45% to $279.70.
The Organization of the Petroleum Exporting Countries (OPEC) is scheduled to release its monthly oil market report at 7 a.m. EST.
At 8:30 a.m. EST, the New York Federal Reserve is set to publish the results of its January regional manufacturing survey. Analysts anticipate that the headline index will demonstrate an increase from -11.20 in December to -8.70 in January, which still indicates a contraction in the sector.
The U.S. Treasury will be holding an auction for three-month and six-month Treasury bills at 11:30 a.m. EST and 52-week bills at 10:35 p.m. EST.
John Williams, a member of the Federal Open Market Committee and President of the New York Fed, is scheduled to appear in public at 3 p.m. EST.
The price of crude oil futures decreased slightly below the $80-a-barrel mark, while the yield on the 10-year U.S. Treasury note remained near the 3.5% level without making any major progress.
On Tuesday, the stock markets of the Asia-Pacific region experienced a variety of outcomes. Japan and Indonesia saw a surge in their markets, while Australia, South Korea, and Hong Kong all experienced a decline. China’s stocks closed with mixed results after the release of a multitude of economic reports, including the fourth-quarter and 2022 GDP report. The fourth-quarter growth was better than expected, but the year’s data still showed one of the poorest annual performances.
European markets were trading slightly lower in the late morning, as investors exercised caution in anticipation of the upcoming reporting season in Europe and the United States.
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