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U.S. stock futures nudged higher early Thursday, as Wall Street looked to stabilize after a poor start to the year.
How are stock-index futures trading
-
S&P 500 futures
ES00,
+0.14%
rose 7 points, or 0.1%, to 4753 -
Dow Jones Industrial Average futures
YM00,
+0.15%
added 46 points, or 0.1%, to 37743 -
Nasdaq-100 futures
NQ00,
+0.19%
climbed 34 points, or 0.2%, to 16572
On Wednesday, the Dow Jones Industrial Average
DJIA
fell 285 points, or 0.76%, to 37430, the S&P 500
SPX
declined 38 points, or 0.8%, to 4705, and the Nasdaq Composite
COMP
dropped 174 points, or 1.18%, to 14592.
What’s driving markets
The S&P 500 has lost 1.4% and the Nasdaq Composite 2.8% in just the first two sessions of 2024 as investors took some profits following a sharp rally at the end of last year.
Heightened Middle East tensions, concerns that the surge higher had left equity indices technically overbought, and worries that the Federal Reserve may not reduce borrowing costs this year at the pace investors had hoped, were all seen contributing to the sell-off.
Indeed, minutes from the Fed’s December meeting released Wednesday showed officials welcomed the fall of inflation of late but still saw interest rates likely staying high for longer than traders were pricing in.
“The beginning of 2024 has seen a slight recalibration of market-based interest rate cut expectations, lingering geopolitical concerns, position adjustments ahead of U.S. labor statistics, and a flurry of corporate debt issues raising supply concerns, all contributing to a subdued start to the year in financial markets,” said Stephen Innes, managing partner at SPI Asset Management.
Equity bulls will be hoping that data continues to show economic activity slowing to the extent that it helps the Fed achieve its 2% inflation target, but not by so much that it indicates a contraction that would badly hit corporate earnings. The fourth quarter of 2023 earnings season will kick into gear at the end of next week.
To that end investors will keep a close eye on the December nonfarm payrolls report, released Friday, hoping its shows steady jobs growth with benign wage pressures.
U.S. economic updates set for release on Thursday include the ADP private sector employment report for December, due at 8:30 a.m. Eastern, weekly initial jobless claims at 8:30 a.m., and the S&P final services PMI for December at 9:45 a.m.
Ahead of those catalysts some analysts were already suggesting that the recent market pullback made stocks more attractive.
“While I suspect that this isn’t the larger decline that will eventually be needed to erase some of the weekly overbought conditions in many sectors, I feel that the recent selling is sufficient to consider SPX a much better risk/reward than a few weeks ago, and that short-term lows are close,” said Mark Newton, head of technical strategy at Fundstrat.
