Traders work on the floor of the New York Stock Exchange during afternoon trading on April 02, 2024 in New York City.
Michael M. Santiago | Getty Images
U.S. stock futures flickered near the flatline Wednesday night as the major averages continued to languish in the start of the second quarter.
Futures tied to the Dow Jones Industrial Average rose just 7 points, or 0.02%. S&P 500 futures ticked up 0.05%, while Nasdaq 100 futures added 0.1%.
During Wednesday’s main trading session, the Dow slipped 0.1% to register a three-day negative streak. Meanwhile the S&P 500 and Nasdaq Composite inched up just 0.1% and 0.2%, respectively.
Investors’ fears that the Federal Reserve may keep rates higher longer weighed on stocks. Fed Chairman Jerome Powell said on Wednesday that policymakers will need more proof that inflation is moving toward the central bank’s 2% guideline before rates can come down. Atlanta Fed President Raphael Bostic also told CNBC that he thinks one cut might be in the cards.
As a result, Wall Street has adjusted its expectations for rate reductions. Fed funds futures trading data now suggests a 62.3% likelihood of a cut at the Federal Reserve’s June meeting, down from about 70% last week, according to the CME FedWatch Tool.
In addition, companies added 184,000 workers in March, according to ADP. The result trounced Dow Jones’ estimate of 155,000 and spurred investors’ fears that rates may indeed stay higher longer. The 10-year Treasury note briefly topped 4.4% and touched a high for 2024.
“There’s a lot of short-term volatility and nervousness in the bond market,” said Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report. “I don’t think that the Fed really has any reason to cut rates. The economy is so strong and we still have not beaten inflation yet.”
Meanwhile, he thinks the equity market is showing signs of a “bullish rotation,” or a diversification of growth beyond the megacap tech names that have powered the market rally since last fall.
“I wouldn’t be surprised to see leadership move into other sectors besides tech. I think we’ll probably see a healthy rotation into some of the sectors that should benefit from stronger economic data,” said Tentarelli. “Some of the Magnificent Seven stocks maybe won’t outperform like they did last year.”
On the economic front, investors will be looking to initial jobless claims numbers for the week ending March 30. The U.S. trade deficit as of February will also be released Thursday morning. All eyes are on Friday for the release of March’s nonfarm payrolls.
The S&P energy sector closes at a new record – a first since 2014
The surge in the energy sector – now up nearly 16% in 2024 – comes as crude oil futures touch their highest levels since last October, rising amid geopolitical tensions and OPEC+ policy.
As the major averages struggle to maintain their first quarter momentum, the energy sector is the leader within the S&P 500, up 2.84% in the second quarter.
–Darla Mercado, Gina Francolla
Gold, Japanese stocks and U.S. stocks all reaching “escape velocity,” one strategist says
Prices for gold, Japanese stocks and U.S. stocks are all reaching “escape velocity,” according to Larry Jeddeloh of TIS Group and The Institutional Strategist newsletter.
With gold at all-time highs (at least nominally), “there is no overhead resistance left,” Jeddeloh wrote Wednesday. “[C]entral banks all over the world have become heavy buyers of gold…the interest of central banks in holding alternatives to sovereign bonds already exists and it will grow,” leaving gold “in orbit.” The short-term target for gold may be $2,440-$2,490 an ounce, and $3,000 long term, he wrote.
Similarly, the Nikkei 225 index of Japanese stocks “has broken out to an all-time high and if I apply a measured move analysis to the chart, the long-term target is about 71,000,” the strategist wrote. “[I]n time and price this market could go a long way,” partly because Japanese stocks are underowned by so many domestic and international investors.
Nikkei 225 index of Japanese stocks over past 12 months.
Finally, the S&P 500 has also “hit escape velocity,” wrote Jeddeloh, who earlier in his career was chief investment strategist at UBS in Zurich. “This is another big cap, liquid market which is on all-time highs, there is no overhead resistance, there is earnings growth, GDP growth, a central bank which is limited in what it can do with interest rate rises, but has a lot of incentive to cut rates. Like Japan, foreign investors do not own enough of SPX,” he wrote. At the same time, “U.S. companies operate global franchises, are technology leaders and next-gen technologies are liquid and have name recognition.”
— Scott Schnipper
Stocks making the biggest moves after hours
Check out the companies making headlines in extended trading.
Levi Strauss & Co — Shares jumped 8% after the company posted an earnings and revenue beat in the first quarter. The apparel company reported adjusted earnings of 26 cents per share on $1.56 billion in revenue. Analysts surveyed by LSEG had expected 21 cents earnings per share on $1.55 billion in revenue. Levi’s also raised its full-year profit guidance.
Blackberry — The cybersecurity stock jumped 7.8% after the company announced better-than-expected quarterly results. BlackBerry reported losses of 3 cents per share, versus consensus estimates of 4 cents losses per share, according to StreetAccount. Revenue came in at $173 million, beating forecasts of 150.5 million.
Simulations Plus — The small cap stock gained more than 7% after releasing its fiscal second-quarter results. The company, which develops software for pharmaceutical drug discovery, topped quarterly estimates on both top and bottom lines. Management also reaffirmed its full-year guidance that came above estimates.
— Hakyung Kim
Stock futures open flat
U.S. stock futures traded near the flatline Wednesday night.
Dow Jones Industrial Average futures inched up just 4 points, or 0.01%.
Futures tied to the S&P 500 and Nasdaq-100 ticked up 0.04% and 0.05%, respectively.
— Hakyung Kim
