The market mood has turned mixed, as blue chips and small-caps hold onto the upward momentum. However, negative reactions to earnings could test the tech sector’s resilience and put brakes on the rally. The market could also look for cues from a few key Main Street data on jobless claims, manufacturing activity and the housing market, as they await next week’s monetary policy decision.
Cues From Wednesday’s Trading:
Stocks closed higher yet again on Wednesday, although the volatility in the tech space kept sentiment subdued. Earnings continued to lend support, as the Dow Industrials notched up its eighth straight session of gains.
The tech sector saw volatility, as traders took profit in some bellwether names. The Nasdaq Composite Index, a tech-heavy average, traded in a broad range of 14,317.09-14,446.55 before closing marginally higher.
All three averages continue to trade at their highest levels in more than 15 months and the small-cap Russell 2,000 Index ended at its highest level since early February, signaling that it may have some catch-up to do.
Defensives such as consumer staples, real estate, and utility stocks gained ground in the session, while material and technology stocks saw moderate weakness.
US Index Performance On Wednesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.03% | 14,358.02 |
| S&P 500 | +0.24% | 4,565.72 |
| Dow Industrials | +0.31% | 35,061.21 |
| Russell 2000 | +0.45% | 1,984.89 |
Analyst Color:
Investors continue to buy stocks despite the Fed overhang and analysts see the rally continuing until problems up in the earnings report.
“Valuations are getting to lofty levels, especially given the hawkish Fed, and central banks around the globe in general, this time not only raising overnight rates but also running down their massive balance sheet,” said fund manager Louis Navellier.
“But for now, until problems show up in earnings there are clearly more buyers than sellers and the question appears to be not whether to buy or not, but what to buy,” he added.
Futures Today
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.61% |
| S&P 500 | -0.11% |
| Dow | +0.11% |
| R2K | +0.32% |
QQQ) gained 0.65% to $383.15, according to Benzinga Pro data.
Upcoming Economic Data:
The Labor Department is scheduled to release its weekly jobless claims report at 8:30 a.m. EDT. Economists expect the number of individuals claiming unemployment benefits to increase from 237,000 in the week ended July 8 to 242,000 in the week ended July 15.
The Philadelphia Federal Reserve is due to release the results of its regional manufacturing survey for July at 8:30 a.m. EDT. The consensus estimate calls for the diffusion index of business activity to remain negative at -10, suggesting continued contraction. The index, however, is expected to rise slightly from -13.7 in June.
The National Association of Realtors will release its existing home sales report for June at 10 a.m. EDT. Economists expect existing home sales to dip from 4.30 million units in May to 4.20 million units in June.
The Conference Board is due to release its leading economic index for June at 10 a.m. EDT. The LEI is expected to drop 0.6% month-over-month following a 0.7% drop in May.
The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT and 10-year TIPS at 1:30 p.m. EDT.
See also: Best Futures Brokers
Stocks In Focus:
- Tesla, Inc, (NASDAQ:NFLX) over 6% in premarket trading following the release of their quarterly results.
- Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) slipped over 2.50% following the Taiwanese foundry’s second-quarter print.
- Discover Financial Services, Inc. (NYSE:DFS) plunged over 12% after the company paused buybacks and disclosed regulatory scrutiny.
- Travelers, Inc. (NYSE:DHI) are among the companies reporting ahead of the market open.
- Those reporting after the close include CSX Corp. (NASDAQ:COF).
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures rose 0.28% to $75.48 in early European session on Thursday after declining by 0.53% in Wednesday’s session.
The benchmark 10-year Treasury note fell 0.045 percentage points to 3.787%.
The Asian markets closed Thursday’s session on a lackluster note, as traders reacted to the negative earnings reports from the U.S. and the Chinese banks’ decision to leave prime lending rates unchanged. The one-year loan prime rate and the five-year LPR were maintained at 3.55% and 4.20%, respectively following an unchanged stance from the nation’s central bank earlier this week.
European stocks rose in late-morning trading on Thursday.
Photo by Tada Images on Shutterstock
