The U.S. stock market may get off to a muted start this morning, as a busy week on Wall Street commences. Overnight, the markets in Europe have been putting in a mixed session, and on our shores the S&P 500 futures have been trading close to the neutral line early this morning. In the days ahead, investors will continue to follow debt ceiling talks in Washington, hoping that the various political voices in the capital can soon reach a solution. Unfortunately, the lack of clarity on this issue is not helping sentiment, and may add to market volatility. Elsewhere, the technology sector may be an area of focus after China warned that products from Micron Technology (MU) may pose cybersecurity risks. Also, Meta Platforms (META) was recently hit with a sizable fine from regulators in the European Union.
In economic news, no major items are scheduled for today. However, tomorrow we will get a look at the new home sales figures for the month of April. On Wednesday, the FOMC (Federal Open Market Committee) will publish the minutes from its latest meeting. Investors tend to dissect these notes carefully, as they can provide insight into the Federal Reserve’s decision making process. On Thursday, the second estimate of first-quarter GDP (gross domestic product) will be reported. Finally, on Friday the PCE (Personal Consumption Expenditures) Price Index for the April will be released.
In the corporate arena, a handful of large companies are set to deliver their results over the next few days. We will hear from a wide range of retailers, such as Lowe’s (LOW), Dick’s Sporting Goods (DKS), and Costco (COST). In addition, we will receive reports from a few big technology corporations, including Nvidia (NVDA) and Autodesk (ADSK). These companies are leaders in their respective industries, so investors should be paying attention to these releases.
From a technical vantage point, the S&P 500 Index managed to rally late last week, after being stuck in a sideways range for most of April and May. That advance puts the broader index at the highest level reached in 2023, and near the psychologically significant 4,200 mark. From a sector perspective, the technology stocks have gained popularity, as investors have become excited about AI (artificial intelligence) applications. In contrast, the energy and financial issues continue to underperform the pack. Moving ahead, some value-oriented investors may start to rotate capital into parts of the market that have been overlooked. This might be a healthy development, as it would lead to wider market “participation”, that is, more sectors of the market advancing simultaneously.
At the time of this article’s writing, the author had a position in Nvidia.
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