Benzinga - by Shanthi Rexaline, Benzinga Editor.
The sentiment on Wall Street turned extremely cautious on Tuesday as investors awaited key earnings releases from companies like Microsoft Corp. (NASDAQ:MSFT), Alphabet, Inc. (NASDAQ:GOOGL), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
The Federal Reserve Open Market Committee, the policy-setting arm of the Federal Reserve, began its two-day meeting on Tuesday, with a decision expected on Wednesday. While the futures market indicates an anticipated pause at the meeting, traders will closely analyze the post-meeting policy statement and Fed Chair Jerome Powell’s press briefing for potential trading cues.
Cues From Monday's Trading:
U.S. stocks opened Monday’s session higher but exhibited caution in early trading before rallying strongly, particularly in the final hour. This strength emerged despite a lack of significant Main Street catalysts, as traders factored in expectations of a robust tech reporting season. Several tech companies, including the “Magnificent Seven,” are scheduled to report this week.
The Dow Industrials, S&P 500 Index, and Nasdaq 100 all closed at fresh records, while the Nasdaq Composite reached a new two-year high.
Small-cap stocks also joined the rally, with the Russell 2,000 Index surpassing the 2,000 level.
Most sectors, except for energy stocks, saw gains, with consumer discretionary, communication services, and IT stocks showing strong increases.
US Index Performance On Monday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +1.12% | 15,628.04 |
| S&P 500 Index | +0.76% | 4,927.93 |
| Dow Industrials | +0.59% | 38,333.45 |
| Russell 2000 | +1.67% | 2,011.42 |
Analyst Color:
One of the most bullish analysts, who rightly called the S&P 500’s new high this year, has turned cautious. Fund Strat’s Tom Lee said in an interview with CNBC flagged a likely pullback.
“This week is gonna tell us how much further we go,” Lee said, adding that he is penciling in a move potentially to 5,000. “And from there.. an air pocket forms,” he said. He premised the expectation on investors’ worries over potential Fed moves. The market has been having a parabolic move since October and typically such moves end in retracements, he said.
“We continue to be strong, but then after that, I think there's a big air pocket,” Lee said. The analyst has a 5,200 target for the S&P 500 this year.
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.04% |
| S&P 500 | -0.10% |
| Dow | -0.14% |
| R2K | -0.12% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) slipped 0.08% to $490.86 and the Invesco QQQ ETF (NASDAQ:QQQ) edged down 0.02% to $428.06, according to Benzinga Pro data.
Upcoming Economic Data:
S&P Case-Shiller 20-city composite house price index for November is due at 9 a.m. ET. The index is expected to show a seasonally unadjusted 5.8% in November, faster than the 4.9% increase in October.
The Federal House Finance Agency will also release its house price index around the same time. Its house price index for November is widely expected to show a 0.2% month-over-month increase in November compared to the previous month’s 0.3% growth.
The Labor Department is scheduled to release its “Job Openings and Labor Turnover Survey” for December at 10 a.m. ET. Job openings for the month is expected to be at 8.750 million compared to 8.790 million in November.
See also: Futures Vs. Options
Stocks In Focus:
- F5, Inc. (NASDAQ:FFIV) climbed over 10% in premarket trading following the release of its quarterly results.
- Among the other stocks that are moving on earnings are Sanmina Corporation (NASDAQ:SANM) (up nearly 16%), General Motors Corp. (NYSE:GM) (up about 6%), and Whirlpool Corporation (NYSE:WHR) (down about 5%).
- Major names on tap to report earnings ahead of the market opening include Pfizer, Inc. (NYSE:PFE), JetBlue Airways Corp. (NASDAQ:JBLU), and United Parcel Service, Inc. (NYSE:UPS).
- AMD, Alphabet, Electronic Arts Inc. (NASDAQ:EA), Juniper Networks, Inc. (NYSE:JNPR), Microsoft, Mondelez International, Inc. (NASDAQ:MDLZ), Skyworks Solutions, Inc. (NASDAQ:SWKS), Starbucks Corp. (NASDAQ:SBUX) and Unum Group (NYSE:UNM) are among the key companies reporting after the market close.
Crude oil futures fell 0.07% to $76,73 in early European session on Tuesday following Wednesday's 1.58% pullback.
The benchmark 10-year Treasury note fell 0.029 percentage points to 4.062% on Tuesday.
Asian stocks closed mixed yet again on Tuesday, with the Hong Kong, Chinese, and Indian markets slumping, while the sentiment was lackluster elsewhere. Traders waited to see off the Fed decision due on Wednesday and also remained apprehensive about the U.S. tech earnings.
The major European markets traded higher by late-morning trading as traders digested mixed GDP data for the region.
Read Next: Fed Meeting Preview: Is A March Rate Cut Likely?
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