Caution is writ all over the face of the market ahead of the start of a new trading week. Traders may prefer to move to the sidelines wary of recent gains, which have pushed the averages past the neutral zone and toward the oversold territory. An additional element of risk has emerged in the form of the prospect of higher oil prices, which is seen as inflationary.
Cues From Past Week’s Trading:
Stocks closed the week ended March 31 solidly higher, drawing encouragement from a further slowdown in inflation and the lack of any further negative headlines on the banking crisis. Technology stocks led the market’s advance during the week.
The Dow Industrials settled the week at its highest level in about a month and the broader S&P 500 Index ended at a nearly 2-month high, while the Nasdaq Composite closed at its best level since Sept. 12, 2022.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | +3.37% | 12,221.91 | |
| S&P 500 Index | +3.48% | 4,109.31 | |
| Dow Industrials | +3.32% | 33,274.15 |
For the quarter, the Nasdaq Composite, the S&P 500 Index and the Dow were up 16.77%, 7.03%, and 0.38%, respectively.
Analyst Color:
The market avoided breaking below the December lows in the first quarter, triggering a bullish signal on the “December Low” indicator, said Adam Turnquist, chief technical strategist at LPL Financial.
“April seasonality trends suggest the melt up could continue. Since 1950, the S&P 500 has posted average and median April returns of 1.5% and 1.2%, respectively,” he noted.
Historical return progressions for April show a strong first half of the month, with the S&P 500 historically climbing 1.4%, in the first 12 days of the month, capturing the majority of the gains for the month, he added.
Futures Today
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | -0.61% | |
| S&P 500 Futures | -0.10% | |
| Dow Futures | +0.37% | |
| R2K Futures | +0.32% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust(NYSE:SPY) edged down 0.07% to $409.09 and the Invesco QQQ Trust(NASDAQ:QQQ) slumped 0.56% to $319.13, according to Benzinga Pro data.
Upcoming Economic Data:
S&P Global’s manufacturing purchasing managers’ index is scheduled to be released at 9:45 a.m. EDT. The final reading for March is expected to come in at an unrevised 49.3, up from 47.3 in February.
The Institute for Supply Management’s manufacturing PMI for March is due at 10 a.m. EDT, with economists expecting the number to stay nearly unchanged at 47.5.
The Commerce Department will release its construction spending report at 10 a.m. EDT. The consensus estimate calls for a 0.1% month-over-month drop in construction spending for February.
The Treasury will auction 3-month and 6-month bills at 11:30 a.m. EDT.
The Dallas Federal Reserve is due to release its regional personal consumption expenditure data at 12:05 p.m. EDT.
Federal Reserve Governor Lisa Cook is scheduled to speak after the market close at 4:15 p.m. EDT.
See also: How To Trade Futures
Stocks In Focus:
- Oil stocks traded higher in premarket trading, taking cues from higher oil prices in the wake of OPEC+’s unexpected decision to cut output in a coordinated move. Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp (NYSE:CVX) rose over 3% each. Occidental Petroleum Corp. (NYSE: OXY) climbed over 4.5%. Oilfield services stock Schlumberger Limited (NYSE:SLB) added over 4%.
- Tesla, Inc. (NASDAQ:TSLA) slid about 1.60% following the release of its first-quarter deliveries report.
- World Wrestling Entertainment, Inc. (NYSE:WWE) fell over 1.50% after Bloomberg reported that UFC owner Endeavor Group is close to a deal to buy the former.
Top Analysts’ Call
- Plug Power, Inc. (NASDAQ:PLUG): Morgan Stanley downgrades from Overweight to Equal-Weight and lowers price target from $35 to $15
- Paychex, Inc. (NASDAQ:PAYX): BofA downgrades from Neutral to Underperform and lowers price target from $119 to $105
- Automatic Data Processing, Inc. (NASDAQ:ADP): BofA downgrades from Neutral to Underperform and lowers price target from $249 to $211
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures soared 5.22% to $79.59% in early European trading in reaction to the OPEC+ production cuts. The commodity breached the $80 mark intraday, going past the psychological threshold for the first time since late January.
The yield on the benchmark 10-year Treasury ticked up 0.025 percent points to 3.515% early Monday.
Most Asian markets advanced on Monday, although the South Korean and New Zealand markets came under moderate selling pressure. The upside came amid the release of mixed data points from the region, including a weak business outlook reading from Japan and slowing Chinese manufacturing activity. Services activity in China, however, accelerated. The markets in the region were also reacting to the positive lead from Wall Street from last Friday.
European stocks held up in late-morning trading but showed some volatility.
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