Last week was successful for Wall Street indices. Today the US stock market is poised for quiet trading. The Federal Reserve is keeping silent this week. Investors digested crucial macroeconomic data. Market sentiment will depend on corporate reports.
Despite early optimism, the benchmark stock indices did not log significant growth on Friday. Still, all of them closed in the green. The Dow Jones added 113 points or 0.33%. The Nasdaq closed 0.18% up. The S&P 500 inched up by 4 points or 0.1% to close at 4,505.
The major stock indices traded mixed in the New York pre-market today. The S&P 500 is expected to trade in the corridor between 4,480 and 4,540.
Investors cheered upbeat corporate reports of US top banks early Friday. Later on, the stock indices pulled back. Optimism ebbed away due to a decline in energy stocks which hurt the S&P 500 the most. As a result, the index lost 2.8%.
Shares of JPMorgan rose by 0.6%, but Wells Fargo shed 0.3%. Both major banks reported higher quarterly profits but said they had put more money aside to cover expected losses on commercial real estate loans.
Citigroup shares fell by 4% and BlackRock lost 1.5% as both giants reported lower quarterly revenues. The S&P 500 bank index dropped by 0.9%. At the same time, support for the indices, and in particular the Dow Jones, was provided by shares in the medical services segment.
Despite a rather weak close on Friday, the Dow was up 2.3% for the week, the S&P 500 jumped by 2.4%, and the Nasdaq increased by 3.3%, its best since March. The S&P 500 is up 17% since the start of the year.
The confident growth of the indices amid easing inflationary pressure and the fact of updating more than one-year highs last week aroused the questions among investors. How is the rally justified and has the momentum dried up?
The answer may come from large corporations, as the Fed is silent this week, and the key macroeconomic data was released last week. Monday is a quiet day in the corporate sector.
The corporate earnings season will get a fresh start on Tuesday, along with reports from Bank of America and Morgan Stanley. Wednesday will be jam-packed with tech giants Tesla and Netflix taking the floor.
In the pre-market, Tesla shares showed the most notable growth. The shares added 2.16% after Tesla said on Sunday it had built its first Cybertruck after a two-year delay.
In addition to Musk’s company, Zuckerberg’s company also distinguished itself. Meta shares fell by 1.0% after the Norwegian data protection authority said the social network would be fined 100,000 dollars a day for breaching privacy unless it takes corrective action. Following the plunge, shares regained some losses.
During the week, investors are also anticipating the data on retail sales and housing starts for June. In the currency market, popular currency pairs traded in the pre-market with the same trends as last week. However, the US dollar index regained its footing in the early New York session. Having climbed by 0.08%, the index traded at about 100 in the early hours. It is likely to trade in the intraday corridor between 99.8 and 101.3.
The instrument completed last week with the sharpest weekly fall for the year. The greenback weakened due to the US resilient economy, the healthy labor market, and waning inflationary pressure in all categories.
The economic picture assured investors that the Federal Reserve would have to wind up its cycle of monetary tightening after the meeting on July 26. Hence, investors shifted focus towards the euro. The ECB is widely expected to raise the refinancing rate next week. More rate hikes will follow.
As a result, the euro extended its growth on Monday and reached 1.12440 against the US dollar, the strongest level in 16 months. The euro looks heavily overbought. So, a downward correction will follow. Analysts are also puzzled about massive sell-offs of the US dollar.
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