Benzinga - by Shanthi Rexaline, Benzinga Editor.
Thursday’s session is set to open on a positive note for U.S. stocks, with attention focused on forthcoming inflation data that could influence trading direction. A lower-than-expected inflation figure might trigger a rally, propelling the S&P 500 Index to new highs. Conversely, indications of increasing inflationary pressure could lead to a rise in bond yields and a further decline in risky assets, including equities.
Analysts are confident that, following a lackluster January, sentiment will likely improve, a trend often observed in presidential election years, potentially extending into the first quarter.
Cues From Wednesday's Trading:
In Wednesday’s trading, major averages closed notably higher as traders embraced risk and gravitated toward tech stocks following their recent dip. Nvidia Corp. (NASDAQ:NVDA) demonstrated strength, registering a 2.28% gain and settling at a new high.
While the averages initially opened slightly higher and briefly entered negative territory, they rebounded from early lows, steadily climbing to finish the session on a solidly positive note. Notably, the Nasdaq Composite Index marked its fourth consecutive session of gains.
Top-performing sectors included communication services, IT, IT services, and consumer discretionary stocks, with energy stocks experiencing a notable pullback.
US Index Performance On Wednesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.75% | 14,969.65 |
| S&P 500 Index | +0.57% | 4,783.45 |
| Dow Industrials | +0.45% | 37,695.73 |
| Russell 2000 | +0.11% | 1,970.26 |
The S&P 500 Index is just 13.11 points away from a new closing high.
Analyst Color:
As the market languishes in the new year, an analyst presented data that suggests it may not be all gloom and doom this year. Commonwealth Financial Network Senior Equity Strategist Tom Logue said in a note that election years since 1957 have typically seen volatile first quarters. Less than half of the years have produced negative returns, while more than 68% of each election year saw a positive return during the second, third, and fourth quarters.
Every single election year since 1957 where the prior S&P 500 annual return was more than 20% saw a positive return, with an average annual return of 12.8% and a median return of 12.63%, Logue said. ”January and Q1 have generally been the bumpiest periods. Half of the six years saw a negative return during January and Q1,” he added.
Futures Today
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.51% |
| S&P 500 | +0.20% |
| Dow | +0.09% |
| R2K | +0.18% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.23% to $477.66 and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.53% to $410.66, according to Benzinga Pro data.
Upcoming Economic Data:
The Labor Department is scheduled to release its December consumer price inflation report at 8:30 a.m. ET. Economists expectations are as follows:
| Monthly Rate – Dec. Estimate | November (actuals) | Annual Rate – Dec. Estimate |
November (actuals) | |
| CPI | 0.2% | 0.1% | 3.2% | 3.1% |
| Core CPI | 0.3% | 0.3% | 3.8% | 4% |
The Labor Department will also release the weekly jobless claims report at 8:30 a.m. ET. The number of individuals claiming unemployment benefits is widely expected to edge up from 202,000 on Dec. 30 to 210,000 in the week ended Jan. 6.
The Treasury is due to auction an eight-week bill at 11:30 a.m. ET and 30-year bonds at 1 p.m. ET.
Richmond Fed President Thomas Barkin is scheduled to speak at 12:40 p.m. ET.
See also: Futures Vs. Options
Stocks In Focus:
- Occidental Petroleum Corporation (NYSE:OXY) rose over 1.60% in premarket trading after Warren Buffett-run Berkshire Hathaway, Inc. (NYSE:BRK) (NYSE:BRK) raised its stake in the energy company to 34%.
- KB Home (NYSE:KBH) fell about 2.50% after the company’s homebuilding revenue fell year-over-year in the fourth quarter. The results, however, exceeded estimates. Seaport analysts downgraded the stock to Neutral.
- Citigroup, Inc. (NYSE:C) moved down over 1% after the company disclosed a $1.3 billion one-time charge related to exposures to geopolitical and economic risks in Argentina and Russia and a charge of about $1.7 billion to operating expenses in the quarter related to a previously disclosed special assessment by the Federal Deposit Insurance Corp.
- Crypto-linked stocks rose as they reacted to the spot Bitcoin (CRYPTO: BTC) exchange-traded fund approval.
Crude oil futures rallied 1.50% to $72.44 in early European session on Thursday after declining 1.20% on Wednesday.
The benchmark 10-year Treasury note fell 0.038 percentage points to 3.992% on Thursday.
Most Asian stocks rallied on Thursday, encouraged by the gains by Wall Street stocks overnight, with Japan and Hong Kong leading from the front. Japan’s Nikkei 225 average rose above 35,000 for the first time since February 1990. South Korea’s Kospi ended marginally lower after the Bank of Korea left its key interest rate unchanged at 3.50% for the eighth time in a row.
Major European markets showed nervousness ahead of the U.S. inflation data.
The U.S. dollar edged down against all major currencies, except the Swiss franc.
Cryptocurrencies continue to cheer the spot Bitcoin ETF approval, with the apex crypto on track to breach the $47,000 mark, thanks to its nearly 3% gain over the past 24 hours.
Read Next: Investor Optimism Rises Ahead Of Key Inflation Reports; Nasdaq Surges Over 100 Points
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