Benzinga - by Shanthi Rexaline, Benzinga Editor.
Major U.S. index futures jumped early Thursday as Nvidia Corp.’s (NASDAQ:NVDA) earnings provided a shot in the arm for the market. A couple of market-moving economic data on the job market and the manufacturing sector and a Federal Reserve official’s speech could also affect the day’s trading. Given the confounding rate outlook, the focus is likely to be squarely on these numbers to understand their implications for the Fed funds rate. A market strategist pointed to historical seasonal strength around May-end through early July.
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.95% |
| S&P 500 | +0.59% |
| Dow | +0.14% |
| R2K | +0.18% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) climbed 0.56% to $532.82 and the Invesco QQQ ETF (NASDAQ:QQQ) traded up 0.91% at $459.95 according to Benzinga Pro data.
Cues From Previous Session
U.S. stocks ended Wednesday’s session weaker, dragged by the minutes of the May Federal Open Market Committee meeting that suggested the central bank is resigned to the idea of staying “higher for longer.” As rate-cut bets unraveled, bond yields nudged up, creating additional selling pressure. Investors also preferred to remain cautious ahead of Nvidia’s earnings.
The averages opened on a narrowly mixed note and hugged the unchanged line until the afternoon. After declining sharply following the release of the minutes, they made good some of their losses by late trading and yet ended lower for the day.
Barring healthcare, industrial, and IT stocks, all other S&P 500 sector classes ended in the red.
The major indices all settled off their all-time highs, although the Nasdaq Composite managed to hit an intraday high.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.18% | 16,801.54 |
| S&P 500 Index | -0.27% | 5,307.01 |
| Dow Industrials | -0.51% | 39,671.04 |
| Russell 2000 | -0.79% | 2,081.71 |
Insights From Analysts:
Carson Group’s Ryan Detrick on Wednesday shared a chart to suggest the market could go another leg up in the near term. Citing historical data, the strategist said, “The last week or so of May and early June tends to be a bullish time for stocks historically,” he said.
The last week or so of May and early June tends to be a bullish time for stocks historically. pic.twitter.com/GSfxuyrEaVWhile the market is cheering each piece of weak data, in the hope that it would prompt the Fed to lean toward a rate cut, too much bad news will ultimately be bad for the market, said Morgan Stanley’s Lisa Shalett. “History suggests that too much bad news eventually becomes just that — bad news — and investors risk being caught unprepared when the tide turns,” she said.— Ryan Detrick, CMT (@RyanDetrick) May 22, 2024
“Our current focus is on U.S. consumers, whose spending powers more than two-thirds of the national economy. Data here paints an increasingly fragile backdrop,” she said, citing the recent sub-par University of Michigan consumer sentiment reading and weak April retail sales data.
Shalett mentioned the following as better bets during the fluid environment:
- Companies with high-quality cash flows and achievable earnings targets.
- investment-grade credit and a form of “insurance” via options on the VIX or puts on the S&P 500
- international equities and real assets, such as gold, real estate investment trusts, master limited partnerships, and commodities
- The Labor Department is due to release its customary weekly jobless claims data at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment benefits to come in at 220,000 for the week ended May 18, down slightly from 222,000 in the previous week.
- S&P Global will release its flash U.S. manufacturing and services purchasing managers’ indices for May at 9:45 a.m. EDT. The consensus estimates call for the flash manufacturing PMI to remain unchanged at 50, a level that demarcates expansion and contraction, and the services PMI to edge up from 51.3 in April to 51.6 in May.
- A Commerce Department report due at 10 a.m. EDT is expected to show new home sales coming in at a seasonally adjusted annual rate of 675,000 in April, down from the March reading of 693,000.
- The Treasury will auction four- and eight-week notes at 11:30 a.m. EDT and 10-year TIPS at 1 p.m. EDT.
- Atlanta Fed President Raphael Bostic is scheduled to speak at 3 p.m. EDT.
Stocks In Focus:
- Nvidia rallied over 6.6% in premarket trading following its beat-and-raise quarter and copious shareholder returns.
- Other stocks moving on earnings are Snowflake Inc. (NYSE:SNOW) (over 3%), V.F. Corporation (NYSE:VFC) (down over 14.50%) and Zuora, Inc. (NYSE:ZUO) (up over 10%).
- Bilibili Inc. (NASDAQ:BILI), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), Medtronic plc (NYSE:MDT), NetEase, Inc. (NASDAQ:NTES) and Weibo Corporation (NASDAQ:WB), Ralph Lauren Corporation (NYSE:RL), Shoe Carnival, Inc. (NASDAQ:SCVL) are among the other notable companies reporting before the market opens.
- Those reporting after the close include Intuit Inc. (NASDAQ:INTU), Ross Stores, Inc. (NASDAQ:ROST), Workday, Inc. (NASDAQ:WDAY) and Lions Gate Entertainment Corp. (NYSE:LGF).
- News Corporation (NASDAQ:NWSA) rallied over 7% on the news of an OpenAI partnership.
Crude oil futures snapped a three-session losing streak and rose solidly, while gold futures pulled further back below the $2,400 level. The U.S. 10-year note yield fell 1.2 basis points to 4.422% and Bitcoin (CRYPTO: BTC) retreated below the $70,000 mark.
In Asia, Chinese and Hong Kong stocks fell sharply following recent gains, orchestrated by hopes of stimulus measures. The Australian and South Korean markets experienced more modest weakness, while most other major markets rallied, led by Japan.
European stocks saw tentative gains in early trading following the sharp pullback in the previous two sessions.
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