U.S. Stock Futures Rise as Fourth-Quarter Earnings Season Ramps Up

What’s Happening

• Dow Jones Industrial Average futures YM00, +0.15% increased by 54 points, or 0.1%, to 38099.
• S&P 500 futures ES00, +0.33% rose by 15 points, or 0.3%, to 4884.
• Nasdaq-100 futures NQ00, +0.59% gained 101 points, or 0.6%, to 17540.

On Friday, the Dow Jones Industrial Average (DJIA) climbed by 395 points, or 1.05%, reaching 37864. The S&P 500 (SPX) increased by 59 points, or 1.23%, reaching 4840. The Nasdaq Composite (COMP) gained 255 points, or 1.7%, reaching 15311.

The S&P 500 closed on Friday at a record high, and the Dow achieved its second record close of the year.

Not Every Stock is Participating in the Rally

While the indexes have been hitting new record highs, it’s important to note that not every stock has been included in this rally.

Mike Wilson, the strategist at Morgan Stanley who has expressed pessimism about the markets, has pointed out the reversal of the year-end rally in lower-quality stocks, the equal-weighted S&P 500, and small caps RUT.

“The relative performance moves this year are a reversion back to the classic late cycle environment in which we find ourselves, which in many ways is synonymous with a soft landing,” noted Wilson in a client communication.

Market Update: Fed Rate Cuts and Tech Stocks in Focus

The expectations of Fed rate cuts have had a significant impact on the market, with bond yields decreasing and equity valuations rising. However, this phenomenon should be viewed in the context of the late-cycle.

According to Matthew Tuttle, the CEO and CIO of Tuttle Capital Management, the tech giants known as the Magnificent Seven have entered overbought conditions.

While Tuttle believes that the market’s disagreement with the Fed on rate cuts will continue to limit progress, he also warns not to underestimate the power of the bullish sentiment once it gains momentum.

This week will see the start of earnings season, with notable companies such as IBM, Netflix, and Tesla reporting their results.

Investors will also keep an eye on various economic indicators, including GDP and the PCE measure of inflation. Rate decisions from the European Central Bank and the Bank of Japan will add to the market’s focus.

Meanwhile, Chinese stocks continue to struggle, as evidenced by the 2% drop in Hang Seng index at the beginning of this week. However, European equity markets show signs of progress.

In other news, Archer Daniels Midland made headlines as it announced that its chief financial officer has been placed on administrative leave amidst an investigation into accounting practices within its nutrition segment. This development led to a decline in the company’s stock price in premarket trading.