The U.S. stock market may look to rebound this morning, after losing ground last week. Notably, the S&P 500 Index futures were advancing about 20 points (0.50%) in early morning trading, which may suggest a positive start to the session. This week, investors will be keeping an eye on the Federal Reserve, while awaiting a report from a cutting-edge technology company.
In the economic arena, no notable reports will be released today. Tomorrow, we will get a look at the existing home sales figures for the month of July, followed by the new home sales numbers on Wednesday. Later in the week, the Jackson Hole Economic Symposium is set to take place. On Friday, Federal Reserve Chairman Jerome Powell will deliver some prepared remarks, which will be closely dissected by investors. At this juncture, the Federal Reserve may maintain a vigilant stance, given that the broader economy seems to be holding up nicely, and inflation has not yet come down to the 2% mark.
Elsewhere, the corporate profit outlook remains an area of uncertainty for investors. Many companies posted soft second-quarter earnings figures, but performed somewhat better than had been expected. Investors currently anticipate that corporate results will improve in the second half of the year. However, many stocks are trading at elevated valuations, and setbacks and disappointments will probably not be well received. On Wednesday, Nvidia (NVDA), a leader in the technology sector, is slated to deliver its quarterly report. Nvidia has been a major force in the emerging artificial Intelligence (AI) movement. This event should be closely scrutinized by investors, and may impact other technology issues.
From a technical vantage point, the stock market hit new high 52-week high ground in late July. However, that advance proved unsustainable, and equities weakened considerably during the first part of August. Notably, recent selling has driven the S&P 500 Index back below its 50-day moving average, located near the 4,450 level. This development may be of concern to technicians and short-term traders. Meanwhile, equities have also encountered some pressure from changes taking place in the fixed-income markets. Specifically, the yield on the 10-year Treasury bond recently climbed above the 4% mark, which creates a competitive environment for dividend-paying equities. Rising fixed-income yields suggest that investors are feeling better about the economy, and are probably thinking that the Federal Reserve will chose to keep interest rates elevated for a while longer. – Adam Rosner
At the time of this article’s writing, the author had a position in Nvidia.
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