The U.S. stock market seems poised to advance at the opening bell today, as a new week on Wall Street commences. Specifically, the broader equity market futures have been trending slightly higher this morning, which is a positive indication, in our view. Today, investors may still be digesting the key events of last week (a sizable interest-rate hike and a stronger-than-anticipated employment report), while also waiting for fresh news to be released.
No major economic items are due out this morning, however an important inflation report is slated for later in the week. Specifically, on Thursday, the Consumer Price Index (CPI) for the month of October will be published. Here, the majority of analysts expect that prices rose nearly 8% during the month, compared to the year-ago period. For perspective, the index logged a roughly 9% advance in July, and prices do seem to be gradually softening. However, the progress has been minimal, so far, and it is unlikely that the central bank will be quick to change its course of action. Meanwhile, it is worth mentioning that a handful of Federal Reserve officials will be delivering speeches at various events throughout the week, and these remarks will probably be closely dissected by investors. Looking further out, the Federal Open Market Committee (FOMC) will hold one more meeting in mid-December, and another interest-rate decision will be made at that time. It remains to be seen if the central bank, which has already implemented four-consecutive 75-basis-point rate hikes, will choose to soften its stance.
In the corporate arena, the third-quarter earnings season is starting to wind down, with most of the larger companies having already reported results. Although many corporations have managed to deliver better-than-expected numbers, it should be noted that top- and bottom-line advances have been modest, and guidance has been lackluster. This morning, BioNTech (BNTX), a company that has become visible due to its advanced technology and partnership with Pfizer (PFE), posted mixed results. Tomorrow, we will hear from DuPont de Nemours (DD), The Walt Disney Co. (DIS), and Occidental Petroleum (OXY).
From a technical perspective, the stock market pulled back last week, pushing the S&P 500 Index back below its 50-day moving average (situated around 3,805). At this point, it is unclear if the bulls can keep the current rally alive, and further volatility is likely. Many traders may point out that stocks tend to perform well during the holiday season, and that mid-term elections might serve as a positive catalyst. However, it should be remembered that the past is not necessarily an indicator of the future, and that the current market environment seems quite complex and challenging. – Adam Rosner
At the time of this article’s writing, the author had a position in Walt Disney (DIS).
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