Before The Bell
The U.S. stock market made solid progress yesterday, with all of the major averages making healthy contributions. Investors seemed fairly optimistic, given the Federal Reserve’s recent remarks. Specifically, after wrapping up its two-day meeting last week, the central bank indicated that due to inflationary pressures, a move to lift interest rates could come sooner than had been previously expected. Overnight, the international markets put in a productive session. In Asia, the Nikkei was up sharply. In Europe, the FTSE 100 made some progress, as well. On our shores, the equity futures aren’t moving much, suggesting a neutral start to the day.
In economic news, there were no important reports delivered yesterday. However, today, we will get a look at the existing home sales figures for the month of May. On Wednesday, the latest new home sales numbers will follow. No doubt, traders will be carefully watching these housing market reports, given the vital role real estate plays for the general economy. It remains to be seen how the housing market will react should costs (building supplies, lumber, metal, and labor) move meaningfully higher. Further, a rising interest-rate climate could put pressure on mortgage lending.
In the corporate arena, the second quarter will soon be drawing to a close. It will be interesting to see if any large companies revise their forecasts before the start of earnings season. Lately, many companies have been providing guidance that has been quite limited. Wall Street will likely want to see if the economic environment has improved enough to allow for a more detailed full-year outlook. Meanwhile, later this week we will hear from a handful of names that follow a non-calendar fiscal year. Among the larger issues, we will receive reports from Paychex (PAYX), a sizable payroll processor, FedEx (FDX), one of the largest shipping providers, and NIKE (NKE), a leader in apparel. Traders will likely be watching these reports, as these companies are quite important in their markets.
Technically, last week, the S&P 500 Index pulled back to its 50-day moving average, located at the 4,180 level. Yesterday’s rally was impressive, and the market has hopefully have found some support. However, it will be critical for the bulls to extend this move over the coming days.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
