Stock futures are in the red this morning, breaking a trend of fresh highs set over the past week. Shares of notable package delivery company FedEx Corp. (FDX) are lower this morning on disappointing earnings and projections, while other stocks are lower. Overall, these factors suggest a weak start to the trading day. Still, investors should note that reports concerning existing home sales and consumer confidence will be released after the market opens and could impact trading.
The stock market action was very positive yesterday, benefiting from a broad rally across a wide array of issues. Traders have priced in the Federal Reserve ending its cycle of interest-rate hikes and are projecting several interest-rate cuts in 2024. Sentiment has improved about easing monetary conditions, causing traders to bid up stocks. The Dow Jones Industrial Average has increased in price each of the past nine days, settling at an all-time high. Additionally, the S&P 500 and NASDAQ have reached multi-year highs and are not far from surpassing their all-time peaks. Overall, the S&P 500 rose 28 points (up 0.59%), the NASDAQ increased 98 points (up 0.66%), and the Dow Jones Industrial Average finished higher by 252 points (up 0.68%). Market breadth was rather very strong, with advancers outpacing decliners by a 4.2-to-1.0 ratio. Energy stocks were among the best performers, benefiting from increases in the related commodities. Consumer staples stocks were among the weakest performers, but were still in the green.
In commodity news, oil prices have risen over the past week, rebounding from recent lows, as traders have bid up the fuel from oversold conditions. Elsewhere, U.S. Treasury bond yields were mixed, with short-term rates rising and long-term ones falling. Traders are starting to price in interest-rate cuts, with a small portion pricing them in as early as the January Federal Open Market Committee (FOMC) meeting. However, this is a small contingent, and we do not agree with that view. The Chicago Board Options Exchange Volatility Index, or VIX, more commonly known as the fear index, fell yesterday and continues its trend of lower lows.
Several economic reports will be released in the days ahead. These include initial jobless claims, the Philadelphia Fed Manufacturing Survey, and the final revision of U.S. third-quarter Gross Domestic Product. On Friday, durable goods orders and core- and non-core Personal Consumption Expenditures will be released. Elsewhere, dozens of companies will report quarterly results in the days ahead. These are mostly smaller in size, though Dow-30 component Nike (NKE) will release its report tomorrow after the close. - John E. Seibert III
At the time of this article’s writing, the author did not hold any positions in the companies mentioned.
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