Nasdaq, S&P 500 Futures Climb After 8-Session Market Rally: What’s Going On – Invesco QQQ

The gravity-defying climb faces risk, as the index futures trade narrowly mixed in early trading on Tuesday. That said, the recent gains could keep traders wary of a potential pullback. A couple of speeches by Federal Reserve officials are the lone Main Street catalysts for the day even as the market has set its eyes on Fed Chair Jerome Powell’s Jackson Hole Symposium address due Friday. Until such time, the market may remain in a wait-and-watch mode.

Given the bounce in cryptocurrencies, stocks exposed to these digital assets could gain some ground and tech stocks appear on track to preserve their upward momentum.

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY edged up 0.04% to $559.82, and the Invesco QQQ ETF QQQ gained 0.10% to $481.76, according to Benzinga Pro data.

Cues From Last Session:

Stocks climbed solidly on Monday as the multi-session run-up continued, with support coming from weak economic data and a Fed speech that perked up hopes of an incoming Fed rate cut. Minneapolis Fed President Neel Kashkari, who is considered more of a hawk, said in an exclusive interview with the Wall Street Journal, “The balance of risks has shifted, so the debate about potentially cutting rates in September is an appropriate one to have.”

The major averages opened higher and moved roughly sideways in early trading before climbing steadily through much of the remainder of the session. The buying interest accelerated in the final few minutes of trading.

The tech-heavy Nasdaq Composite index and the broader S&P 500 index extended their winning streak to eight, and in the process, these averages settled at their highest closing levels since July 23 and July 16, respectively. The S&P 500 is now just under 60 points away from its all-time highs.

The 30-stock Dow Jones Industrial Average is on a five-session winning run, with Monday’s gains coming on the back of the rally in the shares of McDonald’s Corp. MCD, Amgen, Inc. AMGN and Intel Corp. INTC. The blue-chip is now at the highest level since July 17.

The gains were across the board, with all 11 S&P 500 sector classes gaining ground. Communication services, IT and consumer discretionary stocks found notable buying interest.

The Nasdaq Composite, which fell into correction territory -defined as a pullback of over 10% from recent highs, on Aug. 5 amid the market collapse set in by yen carry trade unwinding, has quickly sprung back up. The intraday low hit on Aug. 5 (15,708.54) marked a roughly 16% pullback from the July 11 intraday high of 18,671.07. The index exited correction territory in merely 11 sessions, the fastest recovery since Oct. 2011, Barron’s reported.

Insights From Analysts:

The stock market is entering a “very positive four-week equity trading window,” Goldman Sachs Trading Desk’s Managing Director Scott Rubner said in a note to clients on Monday, Bloomberg reported. The strength could come from the following:

• inflows from trend-following systemic funds that are re-leveraging after cutting their total long exposure from $450 billion in July to $250 billion currently.
• Commodity trading advisers are likely to buy stocks irrespective of the market trend
• Buying by volatility-control funds as the CBOE volatility index posted the biggest nine-day drop in history following the Aug. 5 market collapse
• traders going against the prevailing trend, aka long gamma positioning, which could serve as a buffer in the eventuality of a sell-off
• Corporate demand rising until the corporate blackout window closes for about 50% of the companies on Sept. 13; Goldman estimated that corporate buybacks will likely total $1.15 trillion worth of authorizations and $960 billion worth of executions in 2024.
• Money market investment in equities

That said, the strategist flagged pain ahead for the market. “The pain trade for equities is higher and the bar for being bearish at the beach into a Labor Day barbecue party is high,” he reportedly said. He sees the stock market turning negative after Sept. 16, given the second half of the month has historically been the worst two-week trading period of the year.

Previewing the Jackson Hole Symposium that kickstarts Thursday, WisdomTree Senior Economist and Wharton Professor Emeritus Jeremy Siegel said, Powell’s speech at 10 a.m. on Friday is the big event. “I expect him to clear the path for a rate cut in September, but not divulge the size,” the economist said.

Powell will likely say that the central bank is becoming more confident that inflation is moving towards its target and that it can afford to loosen the degree of monetary restrictiveness, Siegel said, while also cautioning that there is still much data to come, including August inflation and payrolls as well as four more jobless claims.

Upcoming Economic Data

• Atlanta Fed President Raphael Bostic is scheduled to speak at 1:35 a.m. EDT.
• Fed Vice Chair for Supervision Michael Barr will make a public appearance at 2:45 p.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

• Palo Alto Networks, Inc. PANW rose over 2.4% in premarket trading following its quarterly results announcement.
• Lowe’s Companies, Inc. LOW, Medtronic plc MDT and Vipshop Holdings Limited VIPS are among the notable companies due to release their quarterly results before the market opens.
• Those reporting after the close include Toll Brothers, Inc. TOL, Coty Inc. COTY, La-Z-Boy Incorporated LZB and ZTO Express (Cayman) Inc. ZTO.
• Bitcoin BTC/USD rally has propped up MicroStrategy Incorporated MSTR and Coinbase Global, Inc. COIN.

Commodities, Bonds And Global Equity Markets:

Crude oil futures fell yet again and traded around the $73.5 level, while gold futures climbed past the $2,560 mark. Bitcoin gained ground over the past 24 hours and approached the $61K mark.

The Asian markets ended Tuesday’s session on a mixed note, with the Japanese Nikkei 225 average rising sharply, while the Hong Kong, Chinese, Malaysia and Indonesian markets retreated.

The sentiment is fluid in Europe, with the Euro STOXX Index rising slightly in early trading, while the U.K.’s FTSE Index is pulling back sharply.

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