U.S. stock futures indicate a cautious opening on Monday after the market’s seven consecutive weekly winning streak. As the time window for the Santa Claus rally rapidly approaches, investors are expressing concern about the quality of the market run-up thus far. Nevertheless, economic fundamentals are poised to improve in the new year as the Fed gradually reverses its rate hikes. Coupled with a soft landing, this scenario could offer an ideal foundation for stocks to consolidate the gains seen this year.
M&A activity is picking up, and this could be viewed as a signal of confidence in corporate America.
Key Takeaways From Last Week’s Trading:
Tame inflation data and the Fed’s indication of a reversal in its rate hikes in the new year boosted risk appetite in the week ending Dec. 15. The Dow Industrials and the Nasdaq Composite recorded gains for a seventh consecutive session, while the S&P 500, after a six-session winning streak, closed marginally lower on Friday.
The major averages have notched their seventh straight week of gains, with the 30-stock Dow Industrials reaching a record high. The Nasdaq Composite concluded the week at its highest level since Jan. 14, 2022, while the S&P 500 settled just below its peak since Jan. 12, 2022.
US Index Performance In Week Ended Dec. 15
Index Performance (+/-)ValueNasdaq Composite+0.35%14,813.92S&P 500 Index-0.01%4,719.19Dow Industrials+0.15%37,305.16Russell 2000+0.77%1,985.13
The Dow Industrials went from correction to record highs in merely 32 trading days, with falling interest rates and signs of a soft-landing scenario underpinning the recovery, said LPL Financial Chief Technical Strategist Adam Turnquist in a note.
Looking at data over the past 100 years and filtering for record highs occurring three months apart, the analyst said, the Dow Industrials has generated an average 12-month forward return of 11.1% following a record high, with 71% of the time the index was higher. The analyst said he now looks toward the Dow Jones Transportation Average to confirm the breakout.
The Dow’s record-high rally is “another piece of evidence supporting the health and sustainability of the current bull market,” he added.
Chart Courtesy Of LPL Financial
Futures Performance On Monday
FuturesPerformance (+/-)Nasdaq 100-0.05%S&P 500+0.06%Dow+0.08%R2K+0.07%
Upcoming Economic Data:
The unfolding week’s economic calendar is loaded with a slew of housing market data, including homebuilder confidence, new home sales, existing home sales and housing starts. The routinely scheduled jobless claims data, the Philadelphia Fed’s manufacturing survey for December, revised third-quarter GDP data, the personal income and spending report for November, durables goods orders report for November and the final reading of the University of Michigan’s consumer sentiment survey are also on investors’ radar.
On Monday, at 10 a.m. ET, the National Association of Home Builders is scheduled to release the results of its homebuilder confidence survey for December. Economists, on average, expect the index to come in at 36, up from 34 in November.
The Treasury is set to auction three- and six-week notes at 11:30 a.m. ET.
See also: Best Futures Trading Software
Stocks In Focus:
Nio, Inc. (NYSE:NIO) jumped over 12% after the company announced a $2.2 billion investment from CYVN Holdings.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures rose 0.68% to $72.27 in early European session on Monday after settling a volatile week ended December 15 up merely 0.28%
The benchmark 10-year Treasury note fell 0.023 percentage points to 3.905% on Monday.
Most Asian markets settled Monday’s session lower, led by the Hong Kong market. China’s growth worries continue to weigh down stocks in the Greater China region. On the other hand, the Malaysian, New Zealand, and South Korean markets bucked the downtrend with modest gains.
European stocks traded mixed in late-morning trading, with the German market succumbing to a weak domestic business sentiment report. The EURO STOXX 50 is a stock index of eurozone stocks that was last seen trading down 0.36%.
This illustration was generated using artificial intelligence via MidJourney.