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The equity market appears to be on track to build on gains, with the major index futures firmly in the green early Tuesday. Traders apparently are discounting a dovish message from Federal Reserve Chairman Jerome Powell on the first day of the semi-annual monetary policy testimony before Congress. In a speech last week, the central bank chief remarked about the recent progress on disinflation, which raised hopes of rate cuts this year,
Tech stocks rose ahead of the catalyst and bond yields were modestly higher. The futures market has priced in a pause decision at the July meeting, although assigning a 77% probability for a September rate cut. The imminent release of twin inflation reports over the next two sessions and apprehension ahead of the reporting season could introduce caution, especially as the market trades at overbought levels.
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.39% |
| S&P 500 | +0.24% |
| Dow | +0.13% |
| R2K | +0.19% |
Cues From Last Session:
Amid a lack of any major catalysts, stocks went about a volatile ride on Monday before closing mostly higher, with IT stocks and defensive lending support. The Nasdaq Composite and the S&P 500 indices stayed mostly in the green before closing modestly higher, setting intraday and closing records,
The 30-stock Dow Jones Industrial Average surrendered its early gains and pulled below the unchanged line by late-morning trading. Moving roughly sideways around the level, the index closed marginally lower.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.28% | 18,403.74 |
| S&P 500 Index | +0.10% | 5,572.85 |
| Dow Industrials | -0.08% | 39,344.79 |
| Russell 2000 | +0.59% | 2,038.67 |
Insights From Analysts:
The recent string of weak economic data has set off alarm bells among economists. Wharton Professor Jeremy Siegel, senior economist to WisdomTree, said in his recent weekly commentary that though a recession is unlikely, he is concerned about the slippage in growth. “Productivity looks dismal, as many of the large gains in payroll are in low productivity workers,” he said.
The economist sees the need for an immediate rate cut. “The Fed should tee up a rate cut at the July 31 meeting for September, and in fact should contemplate a cut at the next meeting if inflation behaves and the economy continues to slip,” he said.
Siegel expects the market to continue on a bull run, thanks to the prospects of rate cuts, but he said the narrowness of the rally is “bothersome.”
But fund manager Louis Navellier is not too concerned about the narrower participation. He expects the stock market to broaden out in the upcoming month, particularly after the Fed commences rate cuts. “These Fed cuts are essentially the "turbo boost" that the stock market has been waiting for,” he said. The historical pattern in a Presidential election year is that the stock market rallies right up to the election. Immediately after the election, he added.
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Upcoming Economic Data:
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Stocks In Focus:
Commodities, Bonds And Global Equity Markets:
Crude oil futures declined for a third straight day, with the black gold pulling back toward the $81-a-barrel mark, while gold futures were recovering from Monday’s sharp retreat. The benchmark 10-year Treasury note yield rose 2.1 points to 4.28%.
Bitcoin (CRYPTO: BTC) slipped modestly and traded a little over the $57K level.
The major Asian markets advanced, led by the Japanese and Chinese markets, while the Hong Kong market ended little changed with a negative bias. The markets in the region drew inspiration from the S&P 500’s record climb. On the other hand, European stocks are lower in early trading as traders continue to make sense of the regional election results and their ramifications for the markets.
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