The U.S. stock market seems positioned for a soft opening this morning, after selling off late last week. Overseas, the markets in Europe have been losing considerable ground Monday. On our shores, the S&P 500 Index futures have been under some pressure in pre-market trading. In the days ahead, investors will be paying close attention to the banking sector, after the recent collapse of Silicon Valley Bank, an institution that serves emerging technology companies, and Signature Bank (SBNY), which had significant exposure to cryptocurrency. A joint effort by the U.S. Treasury, the Federal Reserve, and the Federal Deposit Insurance Corp. was announced over the weekend to protect customers’ funds and maintain liquidity. Wall Street sentiment may depend on how these efforts play out in the days ahead. Inflation, of course, will also be in focus.
In economic news, there are no major reports scheduled for this morning. However, on Tuesday the Consumer Price Index (CPI) for the month of February will be published. Most analysts think that prices rose roughly 6% during the month (year over year). Although this showing would represent a step in the right direction, managing inflation has proven quite challenging. To combat the problem, the central bank launched an aggressive campaign during 2022, but recently started to soften its stance, implementing a 25-basis point hike at its latest meeting. Looking ahead, the Federal Open Market Committee (FOMC) is slated to meet next week, and investors will be closely watching this event. Wall Street has been concerned that further aggressive monetary policy actions might push the economy into a recession. Now it also seems possible that rapidly rising rates could put stress on the banking sector and capital markets. On Wednesday, the Producer Price Index (PPI) for February is set to be released. That report will also warrant some attention.
In the corporate arena, a few widely-held corporations are slated to deliver quarterly profit reports in the days ahead. Specifically, we will hear from Adobe, Inc. (ADBE), a leading provider of digital media and marketing software. In addition, FedEx (FDX), one of the largest package delivery companies, will weigh in with its numbers.
From a technical perspective, the stock market pulled back during February, and the selling has spilled into the month of March. Notably, the S&P 500 Index recently fell below its 200-day moving average (situated near the 3,940 mark). This development will most likely be viewed as a sign of weakness by traders that adhere to technical systems. At this point, the S&P 500 has given back most of the gains logged in 2023. It is not clear if further declines will materialize, or if stocks will soon find a level of support.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
