U.S. stock futures advanced on Monday, building off a record finish ahead of the ramping up of fourth-quarter earnings season.
What’s happening
-
Dow Jones Industrial Average futures
YM00,
+0.11%
rose 42 points, or 0.1%, 38087 -
S&P 500 futures
ES00,
+0.28%
gained 14 points, or 0.3%, to 4883 -
Nasdaq-100 futures
NQ00,
+0.55%
increased 97 points, or 0.6%, to 17535
On Friday, the Dow Jones Industrial Average
DJIA
rose 395 points, or 1.05%, to 37864, the S&P 500
SPX
increased 59 points, or 1.23%, to 4840, and the Nasdaq Composite
COMP
gained 255 points, or 1.7%, to 15311.
The S&P 500 closed Friday at a record high, and the Dow notched its second record close of the year.
What’s happening
While indexes have been notching record highs, not every stock has been participating.
Mike Wilson, the strategist at Morgan Stanley who has been pessimistic about markets, noted the unwind of the year-end rally in lower-quality stocks, the equal-weighted S&P 500 and small caps
RUT.
“The relative performance moves this year are a reversion back to the classic late cycle environment in which we find ourselves which in many ways is synonymous with a soft landing,” said Wilson in a note to clients.
Expectations of Fed rate cuts has lowered bond yields and raised equity valuations, which he says is typically a late-cycle phenomenon.
Matthew Tuttle, the chief executive and chief investment officer at Tuttle Capital Management, said the Magnificent Seven tech giants have now technically moved into overbought conditions.
“My sense is that we don’t go anywhere fast until we work out the disagreement between the market and the Fed on rate cuts, but don’t underestimate the power of the bulls when they get going,” said Tuttle.
Earnings season ramps up this week with results due from companies including IBM
IBM,
Netflix
NFLX,
and Tesla
TSLA,
Also of note will be the release of GDP and the PCE measure of inflation, as well as rate decisions from the European Central Bank and the Bank of Japan.
Chinese plays continued to struggle, as the Hang Seng
HK:HSI
dropped a further 2% to start the week, though European equity markets
XX:SXXP
advanced.
Archer Daniels Midland
ADM,
was in the spotlight on Monday as the agribusiness giant said it put its chief financial officer on administrative leave as it investigates accounting at its nutrition segment. Shares of the group tumbled in premarket.
