Wall Street Set For Strong Open Ahead Of Fed-Speech Deluge: Analyst Sees More Market Gains For Rest Of Year But Has A Word Of Caution
U.S. stocks appear poised for a positive open on Thursday, reversing recent sluggishness, despite Federal Reserve Chair Jerome Powell signaling the central bank’s data-dependent approach to future rate cuts.
Traders seem unfazed by Powell’s hawkish stance, with some clinging to their expectation of three rate cuts this year. Strong gains earlier this year and typical market optimism during election years further solidify this sentiment. The broad-based market rally adds another reason for confidence.
On Thursday, traders will likely look to the weekly jobless claims data and a slew of Fed speeches to confirm their expectations.
Futures Today
Futures Performance On Thursday ( as of 6:20 a.m. EDT)
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.51% |
| S&P 500 | +0.38% |
| Dow | +0.32% |
| R2K | +0.25% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) gained 0.37% to $521.35, and the Invesco QQQ ETF (NASDAQ:QQQ) rose 0.48% to $444.23 according to Benzinga Pro data.
Cues From Previous Session:
Ignoring a private sector report showing higher-than-expected job growth and Powell’s hawkish comments, major indices closed Wednesday mostly positive. The S&P 500 snapped a two-day losing streak, the Nasdaq Composite closed higher, while the Dow Industrials ended slightly lower. Small-caps led the rebound, with the Russell 2000 outperforming the major indices.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.23% | 16,277.46 |
| S&P 500 Index | +0.11% | 5,211.49 |
| Dow Industrials | -0.11% | 39,127.14 |
| Russell 2000 | +0.54% | 2,076.20 |
Insights From Analysts:
Comerica Chief Investment Strategist John Lynch said the equity market could be in for more gains in the rest of the year but cautioned of several market dynamics coming into play. “In the equity markets, history shows that early-year success often begets further gains as the calendar year progresses,” the analyst said.
“Since 1970, when the S&P 500 has risen more than 10.0% in the first quarter, the Index climbs by an average of 6.1% for the remaining three quarters, with positive returns in eight of the nine occurrences.”
A potential full-year return of this magnitude could mean the average return during a presidential year could double, Lynch said. He also said many market dynamics, including both technicals and fundamentals, could come into play. “Technical tailwinds are evident, though fundamentals remain dependent on other factors including demand, pricing, geopolitics and policy,” he said.
FundStrat’s Tom Lee made the case for buying the recent mini-dip in the firm’s commentary published on Wednesday. Following the recent weakness, the broader indices were in oversold levels, based on a 30-minute relative-strength index, and were still amid a clear uptrend, he said.
Citing Mark Newton, Global Head of Technical Strategy at FundStrat, Lee said cyclical factors are favorable for stocks into April 20th. A key inflation data point coming on April 10 will likely show March core consumer price inflation coming in below the consensus, he said.
Lee also flagged potential artificial tax-related selling pressure on stocks this week and into next week as investors need to raise cash to pay capital gains. “This is a short-term mechanical issue and will dissipate when tax day passes. In other words, take advantage of this short-term distortion,” he said.
Upcoming Economic Data:
The Labor Department is scheduled to release the weekly jobless claims report at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment benefits to come to 213,000 for the week ended March 30, up from 210,000 in the previous week.
The Commerce Department is due to release the trade balance report for February at 8:30 a.m. EDT. Economists, on average, expect a trade deficit of $67.7 billion, slightly up from $67.4 billion in January.
The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT.
Among the Fed speeches scheduled for the day are:
- Philadelphia Fed President Patrick Harker: 10 a.m. EDT
- Richmond Fed President Tom Barkin: 12:15 p.m. EDT
- Chicago Fed President Austan Goolsbee: 12:45 p.m. EDT
- Cleveland Fed President Loretta Mester, Minneapolis Fed President Neel Kashkari: 2 p.m. EDT
- Fed Governor Adriana Kugler: 7:30 p.m. EDT
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Stocks In Focus:
- BlackBerry Limited (NYSE:BB) rose over 6%, Levi Strauss & Co. (NYSE:LEVI) gained over 8%, while Resources Connection, Inc. (NASDAQ:RGP) fell over 2% in premarket in reaction to their quarterly results.
- Tesla, Inc. (NASDAQ:TSLA) could continue its recovery, with its stock gaining nearly 0.75% in premarket.
Commodities, Bonds, and Global Equity Markets:
Crude oil futures, though seeing a modest pullback, continued to hold above the $85-a-barrel mark on Thursday, and gold futures were flattish above the $2,300 level. The yield on the benchmark 10-year Treasury edged up to above $2.36%.
Bitcoin (CRYPTO: BTC) also fell slightly and at last check, it traded above the $66,000 level.
The major Asian markets that were open for trading on Thursday closed higher, tracking the positive close on Wall Street overnight. The Chinese, Taiwanese, and Hong Kong markets were closed for a public holiday. In Europe, the equity market got off to a positive start.
Image made using AI via MidJourney