Stock Futures Signal Muted Open As Fed Starts 2-Day Meet Today: Analyst Sees 'Good Chance' Of New Highs

Trading in the index futures suggests a nervous opening on Tuesday as Federal Reserve Chairman Jerome Powell and his team begin a two-day monetary policy meeting. This time around the market has to contend with more than the Fed move as the earnings season enters one of its busiest phases.

Cues From Monday’s Trading:

Stocks experienced volatility in Monday’s session, as traders digested the Federal Deposit Insurance Corporation-mediated takeover of First Republic Bank by JPMorgan Chase & Co. JPM.

The S&P 500 Index and the Dow Industrials spent much of the morning session notably above the unchanged line before giving up all the gains in late afternoon trading. Intraday, the broader S&P 500 Index touched a high of 4,186.92, the highest since early February.

The Nasdaq Composite, meanwhile, traded mostly below the flat line, before closing modestly lower.

Among S&P sector classes, consumer discretionary, real estate and energy stocks came under selling pressure, while industrial and healthcare stocks helped offset some of the weakness.

Analyst Color:

Allaying concerns about the market rally fueled by a few stocks, Carson Group’s Ryan Detrick said this happens every year,. “Year best performers will always count for most of the gains,” he said.

Highlighting the strength of the current rally, the analyst noted that the Dow advancers/decliners ratio line is at new highs and the S&P 500 Index is close to breaking out.

“This is actually wide participation and always remember that breadth leads price,” Detrick said. “Good chance new highs are coming with A/D lines making new highs.”

Futures Today

In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY fell 0.13% to $414.95, while the Invesco QQQ ETFQQQ edged up 0.02% at $322.25, according to Benzinga Pro data.

Upcoming Economic Data:

Tuesday will likely be a quiet session on the macroeconomic front. The Federal Open Market Committee, the monetary policy-setting arm of the central bank, is scheduled to kickstart a two-day meeting on Tuesday, although a decision is not expected until Wednesday. If it were to raise rates by 25 basis points, the Fed funds rate would climb to a 16-year high.

The Commerce Department is due to release its factory goods order report for March at 10 a.m. EDT. Economists expect factory orders to increase 1.1% month-over-month following a 0.7% drop in February.

The Bureau of Labor Statistics “Job Openings and Labor Turnover Survey” results for March are due at 10 a.m. EDT. The report gives details on a month’s job vacancies and separations. The number of job openings is expected to decline from 9.931 million in February to 9.775 million in March.

See also: Best Futures Brokers

Stocks In Focus:

• NXP Semiconductors N.V. NXPI climbed over 4.8% in premarket trading after the chipmaker reported its first-quarter results.
• Chegg, Inc. CHGG plummeted over 44% after the ed tech company hinted at ChatGPT weighing down on its new user growth.
• DuPont de Numors, Inc. DD, Expeditors International of Washington, Inc. EXPD, Pfizer, Inc. PFE, Restaurant Brands International, Inc. QSR and Uber Technologies, Inc. UBER are among the companies reporting results before the market open.
• Advanced Micro Devices, Inc. AMD, Ford Motor Co. F, Western Union Company WU and Yum China Holdings, Inc. YUMC are among the key companies reporting ahead of the market open.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures fell 0.54% to $75.25 a barrel after ending Monday’s session down 0.57% at $75.66. The yield on the benchmark 10-year U.S. Treasury note fell 0.044 percentage points but held above the 3.5% mark.

Most Asian markets advanced as a majority of them opened after Monday’s May Day holiday and played catch up to Wall Street’s gains on Friday. The overall sentiment remained muted as traders awaited Wednesday’s Fed decision.

The Australian market bucked the uptrend and pulled back notably after the Reserve Bank of Australia resumed its rate hikes. After pausing at the previous rate-setting meeting, the central bank of the country sprang in a surprise with a 25-basis-point hike to 3.85%.

European stocks opened on a mixed note and have fallen sharply by late-morning trading. Inflation data released by Eurostat showed a slight increase in the headline consumer price index in April. The data cast anxiety among traders, as they look ahead to the European Central Bank’s rate-setting meeting scheduled for Thursday.

Read Next: Financial Whirlwind: 5 Stocks Feeling The Jitters Ahead Of Expected Fed Interest Rate Hike

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