Before The Bell
The U.S. stock market is poised for a soft start today, as traders return from a three-day holiday weekend. Currently, the U.S. equity futures are pointing downward, which implies some weakness at the opening bell. Investors will be focusing on the corporate profit outlook this week as the fourth-quarter earnings season commences, but concerns about inflation and the Federal Reserve’s monetary policy will also likely weigh on the market.
In economic news, traders will have just a couple of reports to review this morning. Specifically, we will get a look at the Empire State Manufacturing Index for the month of January. This issuance provides information on the economy in the greater New York region and can be quite informative. In addition, the National Association of Home Builders (NAHB) Housing Market Index will be published later this morning. Tomorrow, we get a look at the December housing starts and building permits. These figures should receive attention from investors closely following the real estate market.
As noted, the fourth-quarter earnings season is just getting started. Last week we heard from a handful of leading banks, including JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C). However, those reports did little to lift investor sentiment. Today, Goldman Sachs (GS), PNC Bank (PNC), and Bank of New York Mellon (BK) weigh in with their numbers. Wall Street tends to view the large financial institutions as indicators for the broader economy, and these issuances may well set the tone for the earnings season. As more companies post their results and deliver prepared remarks, traders will likely be looking for signs that recent supply-chain issues and inflationary pressures can be managed. Although the actual profits logged during the fourth quarter will be carefully reviewed, the guidance being provided for 2022 will be of the utmost importance.
Technically, the first weeks of January have not been all that encouraging. The S&P 500 Index is currently sitting just below its 50-day moving average, located near the 4,680 area. In addition, the NASDAQ has come under some pressure, with many technology issues down sharply from recent highs. It remains to be seen if the bulls can inspire a sustainable buying campaign at this point, or if the market is due for some consolidation.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
