Nasdaq Index, Dow Jones, S&P 500 News: Flexible Fed, Bank Earnings Propel Futures

S&P 500 Futures Rise on Strong Bank Earnings

S&P 500 futures edged higher on Tuesday, buoyed by Bank of America’s better-than-expected earnings report. This positive momentum follows a strong session on Wall Street that saw the Dow reach new all-time highs.

At 12:10 GMT, Dow Futures are trading 40544.00, up 30.00 or +0.07%. S&P 500 Index Futures are at 5691.50, up 8.50 or +0.15% and Nasdaq 100 Index Futures are trading 20630.75, up 47.00 or +0.23%.

Bank Earnings Exceed Expectations

Bank of America’s shares rose over 2% in pre-market trading after reporting earnings that surpassed analyst forecasts. Similarly, Morgan Stanley topped expectations, although its shares slipped slightly. These results signal a promising start to the new reporting season.

Small-Cap Stocks Gain Traction

The market is witnessing a rotation into small-cap stocks, with the Russell 2000 rising 1.8% on Monday. Tom Lee of Fundstrat Global Advisors predicts this rally could extend for 10 weeks, potentially yielding gains of up to 40%. Lee cites comparatively oversold conditions and lower valuations as key drivers for this trend.

Fed Signals Flexibility on Rate Cuts

Federal Reserve Chair Jerome Powell indicated that the central bank won’t wait for inflation to hit 2% before considering rate cuts. Instead, the Fed will look for “greater confidence” that inflation is trending towards the target. This stance suggests a more flexible approach to monetary policy adjustments.

Tech Giants Face Challenges and Opportunities

General Motors CEO Mary Barra announced uncertainty in meeting the company’s 1 million EV production capacity target in North America by 2025, citing slower market development. Meanwhile, Apple released a public beta version of iOS 18, showcasing new user interface elements and redesigned core apps, signaling potential growth in its software ecosystem.

Economic Data in Focus

Investors are eagerly awaiting June retail sales data, with economists projecting a 0.4% decline from May. Excluding auto sales, a slight increase of 0.1% is anticipated. Additional data on import prices and the housing market will provide further insights into economic conditions.

Market Forecast

The positive earnings reports from major banks and the Fed’s flexible stance on rate cuts paint a bullish short-term outlook for the market. The rotation into small-cap stocks could provide additional upside potential. However, investors should remain cautious and monitor upcoming economic data releases, which could influence market sentiment and trading decisions in the coming days.

Technical Analysis

E-mini S&P 500 Index futures are on the rise on Tuesday with the benchmark index poised to challenge and likely exceed its record high at 5718.75.

On the downside, it looks as if the vulnerable level is 5621.25. A trade through this level will change the short-term trend to down.

The major support remains the 50-day moving average at 5460.42.