The futures markets are in the red this morning following positive results in the stock market over the last several trading days. Consumer spending has come into focus after electronics retailer Best Buy (BBY) cut its full-year sales outlook, citing a downturn in demand for big-ticket items. Shares of Lowe’s (LOW) also declined in premarket trading after the building supply company cut its full-year sales forecast. Overall, these factors suggest a weaker start to the trading day. Still, the release of the Federal Open Market Committee (FOMC) minutes later today may well affect trading this afternoon.
The stock market continued higher yesterday, benefiting from improving sentiment about the U.S. economy. The indices largely moved upward through the day and ended near their highs. Overall, the S&P 500 rose 34 points (up 0.74%), the NASDAQ increased 159 points (up 1.13%), and the Dow Jones Industrial Average finished up 204 points (up 0.58%). Market breadth was positive, with advancers outpacing decliners by a 1.7-to-1.0 ratio. Technology issues were among the best performers, notably gaining from the outperformance of key component Microsoft (MSFT) after the tech giant announced it had hired Sam Altman, who had recently been surprisingly ousted from his position at OpenAI. On the other hand, consumer staples stocks finished in the red yesterday and were among the worst performers.
In commodity news, oil prices rose yesterday, following weeks of declining prices. Prices have dropped as traders priced in less international supply disruption risk despite ongoing wars in the Middle East and Europe. Elsewhere, U.S. Treasury bond yields were lower yesterday as traders moved into the safe-haven asset. Traders are also pricing in less volatility, and most expect that the Fed will hold interest rates steady at the next FOMC meeting in mid-December. The Chicago Board Options Exchange Volatility Index, or VIX, more commonly known as the fear index, fell yesterday, reaching its lowest level since mid-September. Traders appear to be less worried about future price volatility and are moving away from insuring their positions with stock options.
Looking ahead, several economic reports will be released in the coming days. These include initial jobless claims, durable goods orders, and the University of Michigan’s final consumer sentiment index for November. On Black Friday, the market will open for a half-day trading session and the S&P flash services Purchasing Managers’ Index will be released. Additionally, several dozen earnings reports will be released in the days ahead, including after the close today. That said, these will largely come from smaller companies, though notable semiconductor manufacturer NVIDIA Corp. (NVDA) will report after the close today. – John E. Seibert III
At the time of this article’s writing, the author held positions none of the companies mentioned.
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