The equity futures market has a bounce in its step this morning, largely because it rediscovered that bounce in yesterday’s trading, rallying back from morning lows to close the session near its best levels of the day.
That was the second straight session that it has overcome early selling pressure and it was helped along by renewed buying interest in the mega-cap stocks and long-term rates hitting some resistance. Both of those factors remain at work this morning.
Currently, the S&P 500 futures are up 20 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 103 points and are trading 0.7% above fair value, and the Dow Jones Industrial Average futures are up 53 points and are trading 0.1% above fair value.
Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), NVIDIA (NVDA), Tesla (TSLA), and Meta Platforms (META) are all up at least 0.4%. The 10-yr note yield is down one basis points to 4.33%.
Market participants are taking their cue from these moves within the context of a market that has been in a consolidation mode this month as mega-cap stocks have been under selling pressure and long-term rates have been rising.
Unlike more recent sessions, the equity market is poised to start today’s trading on a higher note.
There will be some laggards in the opening mix. There always are. Dick’s Sporting Goods (DKS) will be among the biggest laggards. It is down 20% after coming up well shy of Q2 EPS estimates and issuing disappointing full-year guidance. Dick’s highlighted inventory shrink (i.e., theft) for its earnings disappointment.
Fellow retailers Lowe’s (LOW) and Macy’s (M) are moving in opposite directions after their earnings results. LOW is up 2.5% and M is down 8.3%.
The mixed response there, however, isn’t doing much to alter the tone of the broader market, which is clearly operating under the sway of the mega-cap names and interest rate moves.
There will be an economic release at 10:00 a.m. ET that could hold some sway as a market driver. That will be the Existing Home Sales Report for July (Briefing.com consensus 4.15 million; prior 4.16 million). It is the only release of note on today’s economic calendar.
There will be some interest in the interplay between rising mortgage rates, low supply, and median selling prices. We suspect the market is primed to hear more of the same, however, from this report, which is to say that the supply of existing homes for sale is tight, and overall sales are sluggish, as homeowners are “sheltering in place” because they don’t want to trade out of a low-rate mortgage for a higher-rate mortgage.
It is an understandable stance, particularly if they are not forced to relocate because of a change in jobs.
Investors, though, are likely anxious to see a change in the underlying stock market trend, which has been predominately lower this month. The S&P 500 began the month just shy of 4,600 and it comes into today trading a whisker shy of 4,400.
—
Originally Posted August 22, 2023 – Mega caps put some bounce in market’s step
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.