Nasdaq On Track For Marginally Weak Start, S&P 500 Could Hold Up: What’s Driving Futures

Wall Street appears on track to pause in the first trading session of the new week after the strong rebound from its Aug. 5 market collapse. The lack of any major trading catalysts makes it all the more complicated to determine the trading direction. The momentum is on the market’s side, as two of the three majors are entering the week with a seven-session rally. Chip stocks weakened in the premarket following their recent advances.

The four-day Democratic National Convention kickstarts on Monday and news out of the event could also sway the market. Fund manager Louis Navellier said, “The September 10^th debate is shaping up to be a big deal, and consumer confidence is expected to rise as the Presidential candidates promise us everything and anything.”

Cues From Last Week:

U.S. stocks rode high in the week ended Aug. 16 on the back of twin benign inflation reports, an unexpected drop in jobless claims, and a healthy retail sales report. After starting the week on a nervous note as traders paused for a breather, the major averages kicked into top gear on Tuesday following the release of the July producer price inflation data.

Stocks ground higher yet again Wednesday, although with much-tempered buoyancy, as the July consumer price inflation report confirmed the downward trajectory in pricing pressure. The healthy July retail sales report, the weekly jobless claims data, and positive commentary from Walmart, Inc. WMT reinvigorated the rally on Thursday. Stocks sustained the uptrend on Friday before closing the week notably higher.

The tech-heavy Nasdaq Composite and the S&P 500 Index are on a seven-session winning streak, while the 30-stock Dow Jones Industrial Average rose for a fourth straight session. The former two averages are now at their highest closing levels since July 23, while the latter is at a nearly 3-week high.

The broader S&P 500 Index recorded its best weekly showing since November 2023 and it is trading just shy of its record closing high of 5,631 (July 15).

Insights From Analysts:

Carson Group Chief Market Strategist Ryan Detrick flagged the possibility of strong gains in the back half of the year, premising the deduction on two factors. The strategist noted that the S&P 500 has not had an eight-session winning streak since Nov. 2023. If the broader gauge advances on Monday, it could be a harbinger of more gains, he suggested.

In the past four years, when the S&P 500 Index has had an eight-session run, it ended with close to 20% or more gains, Detrick noted.

Upcoming Economic Data

The Jackson Hole symposium, where central bank chiefs, policymakers, academics, and economists from across the globe would converge, is the key Main Street event scheduled for the week. Fed Chair Jerome Powell will speak at the event on Friday. Several other Fed officials are also on tap this week. Among economic reports, the new and existing home sales report for July, S&P Global’s flash manufacturing and service sector purchasing managers’ indices for August, the weekly jobless claims, and the minutes of Fed’s July monetary policy committee meeting will also be in the spotlight.

On Monday at 9:15 a.m. EDT, Federal Reserve Board Governor Christopher Waller will deliver opening remarks before the Summer Workshop on Money, Banking, Payments, and Finance hosted by the Federal Reserve Board of Governors.

The Conference Board is due to release the leading economic index for July at 10 a.m. EDT. Economists, on average, expect a 0.4% month-over-month drop in the index following a 0.2% increase in June.

The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.

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Stocks In Focus:

Commodities, Bonds And Global Equity Markets:

Crude oil futures slid below the $75-a-barrel mark, while gold futures rose marginally and remained above the $2,500 level. The yield on the 10-year Treasury note moved down 2.3 points to 3.869%. Bitcoin BTC/USD fell nearly 2% over the past 24 hours and traded around the $58.5K level.

The sentiment in Asia was mixed, with the Japanese Nikkei 225 sliding after Friday’s strong advance. The yen strengthened on the back of a report showing a strong rebound in core machinery orders, and this weighed down on the index, which is heavily weighted with export stocks. The New Zealand and South Korean markets also fell notably. while the Indian market experienced modest losses. Most other major markets in the region finished in the green.

European stocks were modestly higher in early trading, with the Euro STOXX 50 Index adding about 0.26%.

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