The U.S. stock futures appear to be relatively unchanged early Thursday, indicating that the S&P 500 may open just shy of the 5,000 mark.
Stock-Index Futures Trading
- S&P 500 futures (ES00) dipped 3 points, or 0.1%, to 5012.
- Dow Jones Industrial Average futures (YM00) fell 13 points, or 0%, to 38761.
- Nasdaq 100 futures (NQ00) added 8 points, or 0%, to 17850.
On Wednesday, the Dow Jones Industrial Average rose 156 points, or 0.4%, to 38677. The S&P 500 increased 41 points, or 0.82%, to 4995, while the Nasdaq Composite gained 148 points, or 0.95%, to 15757.
Approaching a Milestone
The main stock barometer on Wall Street is on the verge of a major milestone. Confidence regarding corporate earnings, particularly from big technology companies, combined with a resilient U.S. economic environment and the expectation that interest rates won't start dropping until later in the spring, has propelled the S&P 500 extremely close to breaching the coveted 5,000 level for the first time.
After touching an intra-day high of 4,999.89 on Wednesday and closing at a record-breaking 4,995.06, futures suggest that Thursday's session might see the S&P 500 opening slightly softer around 4,994.
Mixed Sentiment
Positive quarterly results from Walt Disney (DIS) following Wednesday's closing bell are expected to bolster market sentiment. However, this positivity may be offset by another disappointing earnings update from PayPal (PYPL).
Moreover, what could be even more significant for the S&P 500, as well as the technology-rich Nasdaq Composite, is the substantial 20% surge in shares of Arm Holdings (ARM) after the chip designer provided optimistic guidance and stated an "increasing demand for new technology driven by all things AI."
It is worth mentioning that a significant portion of the S&P 500's impressive 22.4% surge over the past year can be attributed to the belief that major technology companies like Microsoft (MSFT) and Nvidia (NVDA) are capable of delivering earnings boosts through AI-related advancements.
Earnings Reports and Bond Market Conditions Boost Stock Market
As the earnings season progresses, positive reports from various sectors are contributing to a more optimistic market outlook. Initially, there were concerns about poor earnings growth due to disappointing reports from U.S. banks. However, as other sectors have presented their earnings, the overall picture has improved significantly.
Upcoming Company Reports
On Thursday, ConocoPhillips (COP), Cameco (CCJ), and Hershey (HSY) are set to release their earnings before the stock market opens. After the market closes, we can expect reports from Affirm (AFRM), Cloudflare (NET), and Expedia (EXPE).
Improved Bond Market Conditions
The S&P 500 has experienced a rally partly due to calmer conditions in the bond market. The recent auction of 10-year bonds by the U.S. Treasury displayed strong demand amounting to $42 billion. This indicates that the market is becoming less concerned about inflation and the potential timing of the Federal Reserve's first rate cut, which may be pushed back to May.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, noted that the robust demand for U.S. 10-year bonds reflects investors' preference for this investment while keeping a close eye on the impressive performance of major U.S. equity indices.
30-Year Bond Auction and Economic Data
Later today at 1 p.m., the Treasury will conduct an auction for $25 billion worth of 30-year bonds. This will be another significant event influencing the bond market and overall market sentiment.
In terms of economic data, Thursday's releases include the weekly initial jobless claims report at 8:30 a.m. Eastern and December wholesale inventories at 10 a.m.
Insights from Richmond Fed President
Richmond Fed President Tom Barkin will make an appearance on Bloomberg Television at 8:30 a.m., providing valuable insights into the current market situation. Additionally, he will be speaking in New York at 12:05 p.m. Barkin emphasized the need for caution and patience before implementing any rate cuts.
