Trading in index futures suggests a negative opening on Wednesday as investors temper their expectations for cuts in the Fed funds rate and remain cautious about imminent tech earnings. Global cues may also weigh in, as Asian stocks saw a decline in response to fourth-quarter China GDP data. Fed speeches will once again be in the spotlight as traders digest comments from three officials on the monetary-policy setting committee.
The retail sales report and the Fed’s Beige Book could add some volatility to the market. Analysts are generally optimistic about the fourth-quarter season, citing a lowered bar and ongoing demand recovery. The upcoming tech earnings, starting next week, are expected to play a crucial role in determining the short-term market direction.
Cues From Tuesday’s Trading:
U.S. stocks closed in the red on Tuesday as concerns about interest rates and economic growth prompted a defensive stance among traders. The major indices opened significantly lower after regional manufacturing activity data fell sharply to the lowest level since May 2020. Mixed bank earnings and a further decline in Boeing Co.‘s (NYSE:BA) shares also contributed to the negative sentiment.
Although the indices recovered some ground in late-morning trading, with the Nasdaq Composite briefly moving above the unchanged line, they retreated after a Fed official downplayed hopes of a rate cut.
Most S&P 500 sector stocks, except for IT stocks, ended the day lower, with notable declines in the energy, utility, material, industrial, and utility sectors.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.19% | 14,944.35 |
| S&P 500 Index | -0.37% | 4,765.98 |
| Dow Industrials | -0.62% | 37,361.12 |
| Russell 2000 | -1.21% | 1,927.30 |
Analyst Color:
The fourth-quarter earnings season may not be a disappointment, said Jeffrey Buchbinder, chief equity strategist at LPL Financial. Delving into the reasons for the optimism, the analyst said the “bar has been lowered so much.”
Also, the analyst noted some of the disappointments were due to special bank charges and earnings from companies with November quarter-end were generally solid.
“This reporting period may lack the splashy ‘earnings recession over’ headlines we got last quarter,…
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