The U.S. stock market may experience some downward pressure this morning, after moving lower yesterday. At the time of this writing, the S&P 500 Index futures were down about 14 points (-0.30%) in pre-market trading. Today, investors will be largely concentrating on the Federal Reserve and the latest batch of corporate profit reports. It is worth noting that Palo Alto Networks (PANW), a leading provider of cybersecurity solutions, posted weak results yesterday afternoon, and that news is weighing on the technology sector this morning.
In the economic arena, there are no major reports scheduled for this morning. However, a number of Federal Reserve officials will be making remarks today. In addition, later this afternoon the FOMC (Federal Open Market Committee) will publish the minutes from its January policy meeting. Investors will likely be dissecting this release carefully, as they look to gain insight into the Fed’s decision-making process.
In the corporate sector, the fourth-quarter earnings season is still in progress. So far, about 80% of companies in the S&P 500 Index have already posted results, and the numbers have been encouraging. After the market closes, we will receive a report from NVIDIA (NVDA), which is considered to be at the forefront of the artificial intelligence (AI) revolution. The company is one of the largest on the NASDAQ, and its report will be closely followed. The company may well deliver solid numbers, but it could still be difficult to impress investors. Notably, Wall Street will be looking to NVIDIA, in particular, for confirmation that AI is a major development with far-reaching implications, and not just another passing fascination.
Technically, the stock market seems to be at an important junction. Recently, the S&P 500 Index managed to cross above the 5,000 mark, but promptly hit resistance there. While it is hard to speculate, it is possible that some consolidation is necessary at this point. From a sector viewpoint, some capital rotation seems to be taking place. Specifically, investors are starting to move funds in the healthcare, financial, and industrial issues, rather than singularly focusing on technology stocks. Further, we are starting to see a bit more interest in the small-cap issues. These developments may ultimately prove constructive and could provide support for the market in the weeks ahead. – Adam Rosner
At the time of this article’s writing, the author had positions in NVIDIA.
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