The U.S. stock market seems set for a muted opening this morning, after yesterday’s impressive advance. As we were publishing this piece, the S&P 500 Index futures were down about six points (-0.10%) in pre-market trading. Traders will likely be following the latest economic and corporate news, while also paying close attention to the many pronouncements and policies being advanced by President Trump. These proposed initiatives have already started to have an impact on various industries (technology, cryptocurrency, energy, automotive manufacturing, etc.).
In economic news, the most recent weekly jobless claims came in at 223,000, which was modestly above expectations and up slightly from the prior week’s number. Tomorrow, we will get a look at the existing home sales figures for the month of December. Home sales are still down from the peak levels reached in 2021 and 2022, but we are starting to see signs of stabilization. Also tomorrow, the University of Michigan will finalize its January consumer sentiment survey. Many investors follow this report, although it will likely have a limited impact on the stock market.
The fourth-quarter earnings parade is now underway. We recently received results from a number of banks and financial corporations. So far, the results have been positive. Looking forward, we will start to hear from a broader assortment of companies. For example, later today we will receive reports from Texas Instruments (TXN), Intuitive Surgical (ISRG), and Union Pacific (UNP). Tomorrow, Verizon (VZ) and American Express (AXP) will weigh in with their numbers. In the weeks ahead, investors will probably be looking carefully at the reports issued by the mega-cap technology leaders, as the excitement surrounding AI (artificial intelligence) is still fueling investor sentiment.
The stock market started the month of January on a tentative note, but has since surged back to record-high ground. From a sector perspective, the technology stocks have been regaining their leadership position, and many other equity groups have also been making healthy contributions, which is a positive development. Looking ahead, it is difficult to predict where the stock market may be headed. The month of January often sees increased investor inflows. However, equity valuations seem a bit stretched, which could make further gains harder to achieve. In addition, the yield on the 10-Year Treasury bond now stands near the 4.5% mark, which can create competition for equities, especially the dividend-paying issues. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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