Nasdaq Index, Dow Jones, S&P 500 News: ADP, Fed Minutes Eyed; Tesla Drives Pre-Market Strength

Market Momentum Builds as S&P 500 Breaks 5,500

U.S. stock futures traded mixed on Wednesday after the S&P 500 closed above 5,500 for the first time, setting a bullish tone for the pre-holiday shortened session.

At 11:25 GMT, Dow futures are trading 39723.00, up 35.00 or +0.09%. S&P 500 Index futures are at 5568.50, down 0.25 or -0.00% and Nasdaq 100 Index futures are trading 20249.50, down 5.75 or -0.03%.

Tesla Leads Consumer Discretionary Surge

Tesla shares jumped over 3% in pre-market trading, poised for a seventh consecutive day of gains. This momentum follows the company’s strong Q2 delivery numbers, which exceeded analyst expectations. Tesla reported total deliveries of 443,956 vehicles and production of 410,831 units in Q2, surpassing the FactSet StreetAccount consensus estimate of 439,000 deliveries.

Wedbush analyst Dan Ives views Tesla as an undervalued AI play, citing the upcoming “Robotaxi Day” on August 8th as a potential catalyst for the stock.

Sector Performance and Stock Movements

The consumer discretionary sector closed at its highest level since January 2022, boosted by Tesla’s 10.2% gain on Tuesday. This sector outperformed all others in the S&P 500, contributing significantly to the index’s record-breaking close.

Amazon also contributed to the sector’s strength by rising 1.4% and reaching a new all-time high. In other news, Paramount Global shares surged 9% in pre-market trading following reports of a potential ownership change.

Economic Data and Fed Minutes

Investors await several key economic reports, including ADP’s private payrolls data, weekly jobless claims figures, and the U.S. trade deficit balance. The S&P Global U.S. Services PMI and ISM Non-Manufacturing PMI readings are also due.

The publication of minutes from the Federal Reserve’s June meeting will be closely scrutinized for insights into policymakers’ views on inflation and interest rates.

Market Sentiment and Risk Factors

While market momentum remains strong, some analysts express concern about the rally’s sustainability. Goldman Sachs strategist Peter Oppenheimer notes rising risks for equity holders in the second half of the year, citing high valuations and increasing political uncertainty.

Scott Chronert, Citi Research head of U.S. equity strategy, warns of a potential pullback in the coming months, pointing to high growth expectations that may be challenging for companies to meet.

Market Forecast

The short-term outlook appears bullish, with the S&P 500’s record-breaking performance and strong sector leadership from consumer discretionary stocks. Tesla’s continued momentum and positive sentiment in tech stocks are likely to support market gains.

However, investors should remain vigilant due to potential headwinds, including valuation concerns and upcoming economic data releases. The Fed minutes and Friday’s jobs report could provide further direction for market sentiment.

Trading volumes may be lighter due to the holiday-shortened week, potentially leading to increased volatility. Traders should balance optimism with caution, keeping a close eye on economic indicators and company-specific news in the days ahead.

Technical Analysis

E-mini S&P 500 Index futures are nearly flat on Wednesday as traders attempt to build on yesterday’s strength. The market is currently hovering just below its record high at 5588.00. A move through this level will reaffirm the uptrend, but it’s 50/50 whether there is a big follow-through move due to the shortened trading session.

As far as value is concerned, that is found at the 50-day moving average at 5381.05.