Mega-Cap Stocks To Act As Weather Gauge

Articles From: Briefing.com
Website: Briefing.com

By:

Chief Market Analyst

If you are not enthused by the news that the futures market is signaling a positive start for the major indices, we can understand why. The stock market has not acted well this week, registering losses in both sessions that have left the Santa Claus rally out in the cold.

Alas, we’ll see if the stock market can match the weather today and warm up nicely after a particularly cold stretch. Today’s open at least will see temperatures rising.

Currently, the S&P 500 futures are up 30 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 123 points and are trading 1.2% above fair value, and the Dow Jones Industrial Average futures are up 182 points and are trading 0.6% above fair value.

This positive bias has been forged on rebound-minded action in the mega-cap stocks, none more prominent at this juncture than Tesla (TSLA) which is up 6.1% in pre-market trading but still down 38% for the month.

This morning’s move, though, coupled with a 2.9% gain in NVIDIA (NVDA), a 1.6% gain in Apple (AAPL), a 1.1% gain in Alphabet (GOOG), and 0.8% gains in Microsoft (MSFT) and Meta Platforms (META) has fortified the early indication for the broader market.

Also helping somewhat — in a convoluted way — is the understanding that it seems to be getting a little more difficult for laid off employees to find a new job.

Briefly, initial jobless claims for the week ending December 24 increased by 9,000 to 225,000 (Briefing.com consensus 220,000) while continuing jobless claims for the week ending December 17 increased by 41,000 to 1,710,000.

The key takeaway from the report is that the level of continuing jobless claims is the highest since February and up noticeably since September when it was just shy of 1.350 million, suggesting that a very tight labor market is showing some signs of loosening up based on the extended time it is taking for dislocated employees to find a new position.

The futures for the major indices moves to their highs of the morning following this release, which also coincided with some improvement in the Treasury market and a further drop in the U.S. Dollar Index (-0.4% to 104.05).

The 2-yr note yield, at 4.37% before the release, dipped to 4.35%, and the 10-yr note yield, at 3.88% before the release, dipped to 3.86%. That is what we would call “measured improvement,” but the excitability of the equity futures market after the release connotes a strong desire to get out of the cold.

Things are going to heat up for the stock market at the open, then, but the warm, fuzzy feeling most participants are seeking is a hot close.

To that end, the behavior of the ice-cold mega-cap stocks today should be the market’s weather gauge.

Originally Posted December 29, 2022 – Mega-cap stocks to act as weather gauge

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