US Stocks Set For Lower Open Ahead Of House Vote On Budget Deal — But Analyst Sees Outperformance This Year

ZINGER KEY POINTS

• Stocks could see some volatility in the run-up to some key economic data scheduled for the week.
• The markets, meanwhile, has begun pricing in a rate hike in June, given some recent positive developments.

U.S. stock futures indicated a slightly weaker open on Wednesday following a lackluster performance in the previous session. The House will likely vote on the budget bill Wednesday night, given members received access to it on Sunday and House rule dictates that members have 72 hours to read the bill. The uncertainty and anxiety over Friday’s non-farm payroll data that have a bearing on the June rate move could weigh down on the markets.

Cues From Tuesday’s Trading:

Profit-taking sapped the upward momentum of the markets on Tuesday, as traders remained nervous about the budget deal clearing Congress. Among the key data, consumer confidence pulled back in May, while the results of two separate surveys showed an uptick in house prices.

The major averages opened the session higher, although the momentum faltered through the remainder of the session. The Nasdaq managed to settle above the psychological resistance of 13,000 for the first time since Aug. 16, 2022, reflecting the momentum seen in the tech space.

While the S&P 500 ended flat, the 30-stock Dow Industrial Average closed modestly lower.

Consumer staple and energy stocks were among the worst decliners of the session, while technology and consumer discretionary stocks gained ground.

U.S. Indices’ Performance On Tuesday

Index	Performance (+/-)		Value
Nasdaq Composite	+0.32%		13,017.43
S&P 500 Index	+0.0%		4,2,05.52
Dow Industrials	-0.15%		33,042.78

Analyst Color:

The pullback in consumer confidence to a six-month low in May, according to Bolvin Wealth Management’s Gina Bolvin, is another “bullish contrarian indicator.”

“With over $5 trillion in cash on the sidelines, strong stock market momentum and debt ceiling drama closer to resolving, we think there is a good reason for stocks to perform well this year,” the fund manager said.

Bolvin sees the upside coming amid volatility. “The next market-moving catalyst is this week’s jobs reports, which will influence the Fed. So far, the market is telling us the chances of a hike are increasing,” she added.

Futures Today

U.S. Futures’ Performance On Wednesday

Index	Performance (+/-)
Nasdaq 100 Futures	-0.17%
S&P 500 Futures	-0.21%
Dow Futures	0.20%
R2K Futures	-0.50%

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust fell 0.20% to $419.33, while the Invesco QQQ ETF eased 0.19% at $349.32, according to Benzinga Pro data.

Upcoming Economic Data:

The Mortgage Bankers Association is due to release its weekly mortgage application volume data at 7 p.m. EDT. Survey results for the week ended May 19 showed that mortgage application volume fell 4.6% week-over-week on a seasonally adjusted basis as the 30-year fixed rate increased to 6.69%.

Federal Governor Michelle Bowman is scheduled to speak at 8:50 a.m. EDT.

The ISM-Chicago will release the results of its manufacturing activity survey for the Chicago region at 9:45 a.m. EDT. The business barometer index is expected to slip from 48.6 in April to 47 in May, suggesting a deepening of contraction in manufacturing activity.

The Bureau of Labor Statistics is scheduled to release JOLTS job openings data for April at 10 a.m. EDT. Economists, on average, expect an increase in job openings from 9.59 million in March to 9.775 million in April.

The Texas service sector outlook and the Dallas Fed’s services revenue, both for May, are due at 10:30 a.m. EDT.

Philadelphia Fed President Patrick Harker, who is also a member of the Federal Open Market Committee, is due to speak at 12:30 p.m. EDT.

Fed Governor Philip Jefferson will make a public appearance at 1:30 p.m. EDT.

Richmond Fed President Thomas Barkin will speak at 1 p.m. EDT.

The Fed is due to release its Beige Book report at 2 p.m. EDT, with the book providing anecdotal evidence of economic conditions in the 12 Fed districts.

Stocks In Focus:

• Twilio, Inc. rose over 3% in premarket trading after a report suggested activist investor Legion is seeking board changes at the communications software provider
• Hewlett-Packard Enterprises Company, and HP, Inc. fell about 8% and about 5%, respectively, following their respective earnings announcements.
• Ambarella, Inc. tumbled nearly 20% on its negative guidance.
• Advance Auto Parts, Inc. is due to announce its quarterly results ahead of the market opening.
• Among those reporting after the close are C3.ai, Inc., Chewy, Inc., CrowdStrike Holdings, Inc., NetApp, Inc., Nordstrom, Inc., Okta, Inc., PVH Corp. and Salesforce, Inc..

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures extended their losses on Wednesday. They fell 2.43% to $67.77 a barrel after Tuesday’s 4.68% plunge.

The yield on the benchmark 10-year Treasury note fell 0.05 percentage points to 3.646%.

The major Asian markets fell across the board on Wednesday, dragged by business activity data from China that came in worse than expected, with manufacturing activity seeing a steeper contraction and non-manufacturing activity expanding less than expected. Worries concerning the fructification of the U.S. budget deal also preoccupied the minds of traders.

European stocks traded lower in late-morning trading on Wednesday.

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Originally Posted May 31, 2023 – US Stocks Set For Lower Open Ahead Of House Vote On Budget Deal — But Analyst Sees Outperformance This Year