The equity futures market has a familiar look, which is to say it isn’t pointing to the likelihood of big losses at today’s open. On the contrary, the cash market looks poised to hold its ground or nudge higher when the opening bell rings.
Currently, the S&P 500 futures are up one point and are trading in-line with fair value, the Nasdaq 100 futures are up 42 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are down nine points and are trading in-line with fair value.
Those indications might not seem like much, but they are meaningful in the sense that they reflect a willingness to keep holding/buying stocks after a huge run for the broader market. Said another way, they also reflect an ongoing lack of concerted selling interest after that big run.
Entering today, the market-cap weighted S&P 500 is up 9% since the end of May.
Good earnings results (and responses) from a host of blue-chip companies since yesterday’s close, coupled with gains among the mega-cap stocks and big moves in Chinese markets following the Politburo’s tease of increased policy support, have provided the early support.
General Motors (GM), 3M (MMM), General Electric (GE), Sherwin-Williams (SHW), Kimberly-Clark (KMB), and Verizon (VZ) all exceeded consensus earnings estimates and are all trading higher in pre-market action.
Notably, Alphabet (GOOG) and Microsoft (MSFT) are trading higher, too, in front of their earnings reports after today’s close. Those reports are important for the market given the size of those companies, but even more important will be the reaction to those reports.
Will these stocks continue to move higher after their results or will they be met with some selling resistance? It is reasonable to think that the stocks will sell off if there is “bad news” in the reports and/or guidance, but will they sell off if there is good news in the reports and/or guidance? That is really what market participants are waiting to assess.
The reaction will be a driving force for the market, which will also be waiting on the Fed decision and Fed Chair Powell’s press conference, on Wednesday.
For now, it is a steady state in the stock market, which is going to be inundated with earnings news in the next few weeks that will either validate or not validate the multiple expansion that has been predicated on the tenets of the economy avoiding a hard landing, the Fed being close to the end of its tightening cycle, and earnings growth accelerating in the second half of the year.
—
Originally Posted July 25, 2023 – A steady and familiar-looking state for stock market
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Briefing.com and is being posted with its permission. The views expressed in this material are solely those of the author and/or Briefing.com and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.