Nasdaq Futures Slip Ahead Of Key Inflation Data As Tech Setbacks Sap Sentiment, But Analyst Believes Recession Fears Are Fading

After barely holding up so far this week, market sentiment seems to have taken a downturn in the final trading session. Negative reactions to earnings reports, particularly from various tech stocks, have the potential to exert pressure on the market. Of greater significance is the impending release of crucial inflation data, likely to influence the Federal Reserve’s rate decision scheduled for Wednesday.

The futures market has priced in a 97.4% probability of steady rates at the upcoming meeting, the CME FedWatch Tool showed. However, bond market activity suggests traders are beginning to factor in the possibility of rate cuts throughout the year.

Cues From Thursday’s Trading:

Thursday witnessed a positive start in U.S. stocks, propelled by a government report revealing stronger-than-expected growth in the U.S. economy for the fourth quarter. Concurrently, jobless claims exceeded expectations, and durable goods orders stagnated, missing projections. Core order growth slightly surpassed expectations. Another report indicated higher-than-expected new home sales in December.

As traders digested this data and responded to varied earnings results, the major indices maintained a solid position in the morning session. However, by mid-session, the S&P 500 Index hovered just below the unchanged line, while the Dow Industrials and Nasdaq Composite briefly dipped below. In the afternoon, the major indices reversed course, concluding the day in positive territory.

Thursday’s upward movement propelled the Dow Industrials into record territory, with the S&P 500 Index securing a record high for the fifth consecutive session. Advancements were observed in a majority of S&P 500 sectors, particularly IT services, energy, communication services, and utility stocks, while healthcare and consumer discretionary stocks experienced declines.

US Index Performance On Thursday

Analyst Color:

Despite the strong GDP data, inflation components of the report came in benign, fund manager Louis Navellier pointed out. “The PCE level shows that inflation appears well on the way to their 2% target,” he said,…