The U.S. stock market seems positioned for a soft start at the opening bell today. Specifically, the major equity futures are currently down about 35 points, which indicates some downward pressure this morning. This week, corporate profits will be the main area of concentration as the first-quarter earnings season progresses. In addition, Wall Street will be paying attention to the nation’s troubling inflation situation and the Federal Reserve’s monetary policy.
In economic news, there are no major items scheduled for today. However, the remainder of the week will bring numerous releases. Of note, the PCE (Personal Consumption Expenditures) Price Index for the month of March will be published on Friday. This report measures the prices of goods on the consumer level, and is considered to be a meaningful gauge of inflation. As a result, this issuance will be widely followed by investors, economists, and the Federal Reserve. Notably, the central bank recently raised interest rates, and Wall Street expects further action will be taken at the next meeting.
In the corporate arena, the first-quarter earnings season is in full swing. So far, the results have been uninspiring. This week we will hear from a number of major technology names, including Apple (AAPL), Alphabet (GOOG), and Microsoft (MSFT). These sizable companies can easily influence the market’s direction, so investors will likely be paying close attention.
From a technical vantage point, the stock market weakened considerably during the month of April. A recent bout of selling put the S&P 500 Index back below its 50-day moving average, found near the 4,400 mark. Traders following technical systems will most likely be monitoring the situation, and may be taking defensive measures. Of note, the major market average touched the 4,150 area in late February, and investors may be wondering if that event will be repeated. From a sector perspective, there does not appear to be much leadership in the market right now. For the past month traders have been rotating capital into the defensive consumer issues and utility stocks. This behavior suggests a conservative stance, aimed at the preservation of capital. In contrast, dynamic technology issues, which often lead during rallies, remain out of favor. Also, the energy names, which had been popular earlier in the year, may be starting to lose steam.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
