The sentiment on Wall Street turned extremely cautious on Tuesday as investors awaited key earnings releases from companies like Microsoft Corp. (NASDAQ:MSFT), Alphabet, Inc. (NASDAQ:GOOGL), and Advanced Micro Devices, Inc. (NASDAQ:AMD).
The Federal Reserve Open Market Committee, the policy-setting arm of the Federal Reserve, began its two-day meeting on Tuesday, with a decision expected on Wednesday. While the futures market indicates an anticipated pause at the meeting, traders will closely analyze the post-meeting policy statement and Fed Chair Jerome Powell’s press briefing for potential trading cues.
Cues From Monday’s Trading:
U.S. stocks opened Monday’s session higher but exhibited caution in early trading before rallying strongly, particularly in the final hour. This strength emerged despite a lack of significant Main Street catalysts, as traders factored in expectations of a robust tech reporting season. Several tech companies, including the “Magnificent Seven,” are scheduled to report this week.
The Dow Industrials, S&P 500 Index, and Nasdaq 100 all closed at fresh records, while the Nasdaq Composite reached a new two-year high.
Small-cap stocks also joined the rally, with the Russell 2,000 Index surpassing the 2,000 level.
Most sectors, except for energy stocks, saw gains, with consumer discretionary, communication services, and IT stocks showing strong increases.
US Index Performance On Monday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +1.12% | 15,628.04 |
| S&P 500 Index | +0.76% | 4,927.93 |
| Dow Industrials | +0.59% | 38,333.45 |
| Russell 2000 | +1.67% | 2,011.42 |
Analyst Color:
One of the most bullish analysts, who rightly called the S&P 500’s new high this year, has turned cautious. Fund Strat’s Tom Lee said in an interview with CNBC flagged a likely pullback.
“This week is gonna tell us how much further we go,” Lee said, adding that he is penciling in a move potentially to 5,000. “And from there.. an air pocket forms,” he said. He premised the expectation on investors’ worries over potential Fed moves. The market has been having a parabolic move since October and typically such moves end in retracements, he said.
“We continue to be strong, but then after that, I think there’s a big air pocket,” Lee…
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