The U.S. stock market may get off to a mixed start this morning, after yesterday’s volatile session. Of note, the broader equity market futures are currently down about 15 points, which is a negative indicator, in our view.
In economic news, this morning we get a look at the pending home sales figures for the month of August. This release will be of importance, as the housing market accounts for a large part of nation’s economy. Tomorrow, the weekly initial and continuing jobless claims figures will be published. The labor market has been holding up well in a challenging economic climate, but analysts may be worried that conditions could weaken, especially as many corporations have already announced plans to cut staff and delay new hiring. In addition, the third estimate for second-quarter gross domestic product (GDP) will be reported. Most investors expect this issuance to show that the economy slowed during the period, reflecting persistent supply-chain problems and inflationary pressures. Finally, on Friday, the Personal Consumption Expenditures (PCE) Price Index for August will be released. This report is important because it measures the actual prices that individuals pay for goods and services across numerous categories. Notably, this item is widely followed by the Federal Reserve, and is likely reviewed when monetary policy is determined.
In the corporate arena, a few leading corporations will be posting profit reports in the days ahead. Tomorrow, we will hear from both Micron Technology (MU), an important technology name. In addition, Nike (NKE), a manufacturer of sneakers and athletic clothing, will publish its report. These companies are both bellwether names and should provide traders with useful information. Some corporations may start to temper guidance, given the challenging economy, and analysts may also adjust their expectations, in response.
From a technical viewpoint, the S&P 500 Index has moved significantly lower over the past several weeks. In fact, the broader market average recently tested the lows reached in mid-June. Looking ahead, it remains to be seen if the market can find support at this key level, or if another bout of selling will materialize. In either case, the stocks will likely remain choppy, and a defensive posture may make sense. Subscribers will probably want to consider companies with strong balance sheets, and cash flows ample to provide for their dividends. Subscribers to The Value Line Investment Survey will find a sample list of such companies on page 1630 of the current Selection & Opinion section of the Survey.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
