Nasdaq Index, Dow Jones, S&P 500 News: Earnings Season to Pick Up Steam

Key Points

• Futures show variability on bank holiday.
• Stocks rebound after prior week’s declines.
• Mixed inflation data and earnings trends impact yields.

Subdued Futures Trade with Cash Market Closed for Holiday

Amidst a bank holiday, U.S. stock futures showed variability. At 14:48 GMT, E-mini S&P 500 Index futures were at 4811.25, down 5.25 points or -0.11%. E-mini Dow Jones futures dipped 35 points or -0.09%, settling at 37757, while E-mini Nasdaq-100 Index futures declined by 8.00 points or -0.05%, reaching 16961.25.

Stocks Post Comeback Last Week

Major U.S. stock indexes bounced back after the previous week’s declines, ending a nine-week streak of positive performance in year-end 2023. The S&P 500, closing the week, was within 0.3% of its record closing high set on January 3, 2022.

Inflation Moderation

Monthly price reports brought mixed news on inflation control. The Consumer Price Index increased by 0.3% in December, slightly exceeding expectations, marking the third consecutive monthly rise. However, the Producer Price Index, which tracks factory-to-wholesaler prices, slipped by 0.1%.

Earnings Trends and Yield Fluctuations

The U.S. earnings season began with major banks reporting fourth-quarter net income declines compared to the previous year. Analysts forecasted a 0.1% drop in earnings for S&P 500 companies, marking the fourth negative growth quarter in the past five. Simultaneously, mixed inflation reports and shifting interest rate sentiment led to a turbulent week in the bond market, with the yield on the 10-year U.S. Treasury bond initially rising to 4.07% before settling at 3.96% by the end of the week.

This Week’s Forecast with Earnings Expectations

This week presents a slightly bearish outlook due to the shortened trading week because of Martin Luther King Jr. Day. The ongoing earnings reports, especially from the financial sector, could influence market sentiment. The proximity of the S&P 500 to the resistance level suggests a potential upside limit. However, a breakthrough could shift the market toward a more bullish stance.

Economic data, including retail sales and consumer sentiment, along with anticipated Federal Reserve rate cuts, will play a significant role in shaping market trends.

Key earnings to watch this week include Goldman Sachs, where expectations are for a 6.3% YoY decrease in earnings per share to $3.11 and a 7.1% fall in revenue to $9.8 billion on Tuesday.

Wednesday features Kinder Morgan, with expectations of a 3.2% YoY decline in earnings per share to 30 cents and a 3.7% YoY decrease in revenue to $4.4 billion.

On Friday, Travelers is expected to report earnings of $5.00 per share, a 47% YoY increase, on $10.0 billion in revenue, up 13.1% YoY. These earnings reports will provide valuable insights into the market’s direction in the coming days.

Technical Analysis

The E-mini S&P 500 Index currently stands at 4811.25, trading above the 200-day moving average at 4502.17 and the 50-day moving average at 4666.84. This is helping to generate bullish mid-term and long-term momentum.

However, it’s crucial to monitor the pivotal level at 4808.25. If the market crosses to the weak side of this pivot, moving below 4808.25, it could signal a bearish sentiment.

This potential shift might indicate a weakening of support, which could lead to further downward momentum in the market. Traders should stay vigilant and consider additional technical indicators for a more comprehensive analysis before making trading decisions.