Trading in U.S. index futures indicates a potential strong rebound in stocks on Thursday, as traders gear up for the traditional Santa Claus rally that typically extends from the week following Christmas to the first two sessions of the new year. Micron Technology, Inc.’s (NASDAQ:MU) positive earnings report could provide a catalyst to buy the dip seen in stocks on Wednesday.
The jobless claims report, third-quarter GDP inflation readings, and the leading economic index may influence trading decisions. Traders might exercise caution until the release of the personal consumption expenditure index on Friday, known as the Fed’s preferred inflation gauge.
Cues From Wednesday’s Trading:
U.S. stocks experienced a significant pullback on Wednesday as profit-taking triggered a sell-off. Given that major averages entered the session at either record highs or the highest levels in two years, traders demonstrated restraint. The Dow Industrials and the Nasdaq Composite had enjoyed a nine-session winning streak before the session, and the S&P 500 had risen in eight out of the past seven sessions.
While the indices initially opened lower, they later recovered and traded mostly sideways, slightly above the unchanged line. However, in late afternoon trading, they pulled back and experienced a notable decline to close significantly lower.
The selling was widespread, affecting consumer, financial, and utility stocks, which faced the most significant losses.
US Index Performance On Wednesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.50% | 14,777.94 |
| S&P 500 Index | -1.47% | 4,698.35 |
| Dow Industrials | -1.27% | 37,082.00 |
| Russell 2000 | -1.89% | 1,982.84 |
Analyst ColorFund Strat’s Tom Lee, who has the best S&P 500 forecast, said he sees Wednesday’s sell-off as a profit-taking. “Are bears gonna get ‘face ripped’ next 6 days?” he asked. Lee is optimistic about the momentum continuing into the new year, attributing his optimism to a capex cycle that is getting started, the Fed’s pivot, and pessimism of investors giving way to optimism.On the other hand, Comerica Chief Investment Officer John Lynch is not that optimistic. “We look for equity market growth to approximate profit growth next year as elevated market interest rates suggest…
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