Wall Street Gearing Up For Tech-Led Rebound Ahead Of Netflix Earnings: Economist Expects Soft Landing But Says Brace For Bigger Fed Rate Cuts If This Happens

Author: Shanthi Rexaline | July 18, 2024 07:34am

Beaten-down stocks could make a comeback on Thursday, with Taiwan Semiconductor Manufacturing Company Ltd.’s (NYSE:TSM) strong quarterly report lifting sentiment toward tech stocks. The major U.S. index futures were mixed ahead of the trading session.

A few Fed speeches scheduled for the day, and key economic data, including jobless claims, the results of a regional manufacturing survey, and leading economic index may influence trading direction. Traders may also pay attention to the European Central Bank’s rate decision and its monetary policy outlook.

Futures	Performance (+/-)
Nasdaq 100	+0.40%
S&P 500	+0.15%
Dow	-0.13%
R2K	-0.03%

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.18% to $557.94 and the Invesco QQQ ETF (NASDAQ:QQQ) added 0.41% to $483.74, according to Benzinga Pro data.

Cues From Last Session:

Geopolitical concerns and apprehensions around the health of the tech reporting season weighed down on the market on Wednesday. The Nasdaq Composite and the S&P 500 Index languished deep in the red throughout the session and ended notably lower, snapping a three-session winning streak. The former had its worst one-day performance since December 2022 and settled below the psychological 18,000 barrier for the first time since July 1.

Among S&P 500 sectors, IT stocks fell the most, while communication services and consumer discretionary stocks also came under significant selling pressure. On the other hand, strength in healthcare, financial, energy, and consumer staple stocks mitigated some of the weaknesses.

The 30-stock Dow Industrials Average bucked the downtrend and rose for the sixth straight session, with Johnson & Johnson (NYSE:JNJ) leading the charge following the pharma giant’s earnings release. Small-caps, however, retreated from a 2-1/2 year high.

Index	Performance (+/-)	Value
Nasdaq Composite	-2.77%	17,996.92
S&P 500 Index	-1.39%	5,588.27
Dow Industrials	-0.59%	41,198.08
Russell 2000	-1.06%	2,239.67

Insights From Analysts:

Morgan Stanley Chief U.S. Economist Ellen Zentner said despite investor worries over economic data, the firm expects a soft landing for the U.S. economy. The firm expects three rate cuts, each 25 basis points, beginning in September. “However, increased labor market softness could prompt the Fed to bigger cuts to head off a recession,” she said.

Upcoming Economic Data:

• The Labor Department is scheduled to release its jobless claims report at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment benefits to come in at 229,000 in the week ended July 13, up from 222,000 in the previous week.
• The Philadelphia Fed will release the results of its July regional manufacturing survey at 8:30 a.m. EDT. The consensus estimate calls for a reading of 2.9 for the headline diffusion index of business activity, up from 1.3 in June.
• The Conference Board is due to release the leading economic index for June at 10 a.m. EDT. The index is expected to show a 0.3% drop in the index, not as worse as the 0.5% fall in May.
• Chicago Fed President Austan Goolsbee will speak at 10 a.m. EDT, Dallas Fed President Lorie Logan at 1:45 p.m. EDT, San Francisco Fed President Mary Daly at 6:05 p.m. EDT, and Fed Governor Michelle Bowman at 7:45 P.m. EDT.
• The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT and 10-year TIPS auction at 1 p.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

• Alcoa Corporation (NYSE:AA) rose over 1% in premarket trading trading following the aluminum maker’s quarterly report. Kinder Morgan, Inc. (NYSE:KMI) fell over 2.50% and SL Green Realty Corp. (NYSE:SLG) gained over 3%.
• Domino’s Pizza, Inc. (NYSE:DPZ) plunged over 10% on a slight revenue miss.
• Abbott Laboratories (NYSE:ABT), Alaska Air Group, Inc. (NYSE:ALK), Nokia Oyj (NYSE:NOK), Marsh & McLennan Companies, Inc. (NYSE:MMC), D.R. Horton, Inc. (NYSE:DHI) and Novartis AG (NYSE:NVS) are among the notable companies reporting their quarterly results ahead of the market open.
• Those reporting after the close include Netflix, Inc. (NASDAQ:NFLX) and Intuitive Surgical, Inc. (NASDAQ:ISRG).

Commodities, Bonds And Global Equity Markets:

Crude oil futures were modestly lower, while gold futures rose. The 10-year Treasury yield climbed 4.2 points to 4.185%. Bitcoin (CRYPTO: BTC) slipped below the $65,000 level.

The Asian markets had a mixed session, with Japan falling on weak trade data and Taiwanese and South Korean markets extending their slide. On the other hand, the Australian, Chinese, and Hong Kong markets ended in the green.

On the other hand, European stocks firmed up ahead of the rate decision. The European Central Bank is scheduled to announce its rate decision at 8:15 a.m. EDT, with economists anticipating that the bank will hold fire after reducing rates by 25 basis points at the last meeting.

Read Next:

• Netflix, Goldman Sachs, J&J, ASML Lead Q2 Reports This Week As Analysts See Earnings Growth Accelerating To Fastest In Over 2 Years

Image generated using Midjourney

Posted In: $BTC AA ABT ALK DHI DPZ ISRG JNJ KMI MMC NFLX NOK NVS QQQ SLG SPY TSM