The U.S. stock market may encounter some slight resistance at the opening bell this morning, as another week on Wall Street begins. In the days ahead, traders will receive a key inflation reading, as well as a few important corporate profit reports. Investors may also be keeping an eye on the developments taking place in the Middle East. Over the weekend, rebel forces seized control over Syria in a move that could impact other countries in the region. For now, the price of oil seems to be holding steady at about $68 a barrel. As we were writing this update, the S&P 500 Index futures were off about four points (-0.10%) in pre-market trading. Futures for The Dow Jones Industrial Average were slightly ahead, and the NASDAQ was under some pressure.
In economic news, there are no major reports scheduled for today and tomorrow. On Wednesday, we will get a look at the November CPI (Consumer Price Index), a widely-watched measure of inflation. Most analysts think consumer prices rose about 2.7% during the past month (year-over-year), up just slightly from the 2.6% reading logged in October. On Thursday, the PPI (Producer Price Index), which tracks wholesale prices, will follow. These reports will be carefully studied by investors, as the FOMC (Federal Open Market Committee) is set to convene on Tuesday and Wednesday next week. The meeting will conclude with an interest-rate announcement, followed by remarks from Fed Chairman Jerome Powell. Most investors think that another 25-basis point rate cut will be approved at this juncture. However, assuming the economy continues to expand at a healthy clip, it is possible that the Federal Reserve will be less accommodative in 2025.
Meanwhile, a handful of widely followed corporations are slated to report this week. Later today, we will hear from Oracle (ORCL), a leading data-base software developer. Tomorrow, AutoZone (AZO) will weigh in with its numbers. Later in the week, we will receive reports from Adobe (ADBE), Broadcom (AVGO), and Costco Wholesale (COST).
Technically, stocks continue to hit new high ground. For perspective, the broader S&P 500 Index has staged a roughly 28% advance so far this year, and many technology issues have logged even larger gains. Investors are likely pleased to see their holdings advance, but some may wonder if the current rally is moving a bit too fast. Some issues, especially in the AI (artificial intelligence) camp, seem to be technically extended and valuations look stretched. We will not try to predict the direction of the market, however it is worth remembering that stocks do not go up forever and a correction will probably materialize at some point. On a positive note, patient investors with some dry powder in reserve may find that pullbacks present a chance to scoop up stocks at attractive prices. – Adam Rosner
At the time of this article’s writing, the author had a position in Broadcom.
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