Nasdaq Index, Dow Jones, S&P 500 News: Weak Start to New Year Ahead of Fed Minutes, NFP Report

Key Points

• S&P 500 sees early 2024 downturn, contrasting 2023’s surge
• Earnings watch: WBA and STZ set for later-week reports
• Friday’s non-farm payrolls to impact short-term market direction

Early Call:  Lower on Opening

Stock futures experienced a sideways-to-lower trend in overnight trading on Tuesday. This lukewarm start contrasts with a robust 2023, where the S&P 500 surged by 24%.

At 10:32 GMT, blue chip Dow Jones futures are trading 37996.00, down 16.00 or -0.04%. Benchmark S&P 500 Index futures are trading 4816.00, down 4.00 or -0.08% and tech-weighted Nasdaq-100 Index futures are at 16992.75, down 30.75 or -0.08%.

2023 Performance Recap

2023 saw the S&P 500 finish with a significant uptrend, marking its best streak since 2004. Despite challenges like a regional banking crisis and geopolitical tensions, the stock market thrived. Technology shares, particularly Apple, Microsoft, and Nvidia, were key drivers of this growth. However, Wall Street forecasts for 2024 are more conservative, with expectations of modest returns amidst concerns of a cooler economic environment.

Earnings Reports Outlook

Walgreens Boots Alliance (WBA) and Constellation Brands (STZ) are in the earnings spotlight. WBA, despite a challenging 2023, is focusing on strategic business shifts under new leadership. Analysts project a decline in its upcoming fiscal first-quarter earnings. On the other hand, STZ shows promise with expected growth in its fiscal third-quarter results, backed by strong analyst confidence.

Economic Reports Anticipation

This week’s focal points include the ISM Manufacturing PMI, Fed Minutes, and crucial employment data. Job openings are predicted to show a marginal increase, with private businesses expected to have added 113,000 jobs in December. The market eagerly anticipates the non-farm payrolls and average hourly earnings data for more insights into the labor market’s health.

Short-Term Forecast

The market appears cautiously optimistic. With the S&P 500 nearing a new high and a mix of expected earnings reports, investors are treading carefully amid economic uncertainties. The upcoming economic reports, particularly on employment, will be pivotal in shaping short-term market sentiment, skewing towards a cautiously bullish outlook.

Technical Analysis

The E-mini S&P 500 Index, trading at 4813.75, shows a slight dip from the previous close of 4820.00. Positioned significantly above both the 200-day (4474.00) and 50-day (4573.60) moving averages, the market exhibits a robust bullish trend.

However, this strength is tempered by vulnerability to a major correction due to the considerable gap between the current price and the minor support level at 4562.50. The absence of immediate resistance levels suggests room for upward movement, but the distance from support levels indicates potential risks in the event of a trend reversal.