Nasdaq Index, Dow Jones, S&P 500 News: Weighing CPI Expectations, Earnings Season Kickoff

Key Points

• Stock futures mixed amid CPI and earnings anticipation
• Crypto down, notable stocks surge on recent developments
• Earnings, CPI reports key to future rate decisions

Pre-Market Overview and Key Events

As traders gear up for an eventful end to the week, stock futures displayed a mixed trend in Wednesday’s pre-market trading. The focus is riveted on two major events: the imminent release of the U.S. consumer price index (CPI) report on Thursday and the onset of earnings season this Friday, featuring reports from major banks.

At 10:52 GMT, the blue chip Dow Jones Industrial Average is trading 37750.00, down 13.00 or -0.03%. The benchmark S&P 500 Index is at 4797.75, up 5.00 or +0.10% and the tech-weighted Nasdaq-100 Index is trading 16876.75, up 46.50 or +0.28%.

Sector Highlights

In the cryptocurrency sector, Coinbase and Marathon Digital witnessed a downturn, dropping by 1% and nearly 3% respectively, mirroring a decline in Bitcoin prices. This was exacerbated by a miscommunication from the U.S. Securities and Exchange Commission regarding Bitcoin ETFs.

Meanwhile, Juniper Networks saw a 0.6% rise following the announcement of its acquisition by Hewlett Packard Enterprise for about $14 billion, though HPE’s shares dipped by 0.3%.

Other notable movements include a 7% rise in WD-40 after outperforming Wall Street predictions, a 5% increase in Intuitive Surgical due to a strong sales outlook, and a 9% jump in PriceSmart shares post impressive first-quarter results.

Market Recap

The previous trading session closed with the S&P 500 and Dow Jones experiencing slight declines, while the Nasdaq Composite managed a marginal gain. Energy stocks led the downtrend in the major S&P sectors.

Inflation and Federal Reserve Outlook

U.S. Treasury yields fell as traders assessed potential inflation impacts on interest rates and the economy. The recently released Federal Reserve’s minutes hinted at possible rate cuts, with uncertainty lingering. The market, however, does not foresee changes in the upcoming January Fed meeting but speculates on rate cuts by March.

Earnings Season and CPI Report

The CPI and producer price index reports are eagerly awaited, with hopes that they’ll show a softening in inflationary pressures, possibly indicating effective high interest rates. This outcome could lead to rate stabilization or cuts. The earnings season, commencing with financial sector reports, is set to add momentum.

Short-Term Forecast

The market holds a cautiously optimistic stance. The CPI report and earnings season are critical determinants of market trends. A bullish outlook is tentatively maintained, contingent on positive earnings and favorable inflation data, potentially easing inflationary pressures and setting the stage for favorable rate adjustments.

Technical Analysis

The E-mini Dow Jones currently trades at 37,732, slightly below its previous close of 37,763. This positioning above both the 200-day (35,223) and 50-day (36,307) moving averages indicates a strong upward momentum in the short and medium term.

Without specific trend line support or resistance levels, the focus shifts to the support at 35,268 and a minor support-turned-pivot at 36,450. The absence of defined minor and main resistance levels suggests a lack of clear barriers to upward movement.

Given its stance above key moving averages and support levels, the market sentiment leans towards bullish, although the proximity to the minor support could introduce some caution among traders. In other words, there is plenty of room to the downside should the market rollover from current price levels. The nearest support target is the price cluster at 36450 – 36307.