S&P 500 (SPY) Report – 01/03/24

Good morning, traders!

The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it… 

On Wednesday, the stock market witnessed a significant downturn, marked by notable drops in stock futures. This downward trend was evident in major indices such as the Dow Jones Industrial Average, S&P 500, and Nasdaq-100, which all saw decreases in their future values. The Nasdaq Composite was particularly affected, recording its worst daily decline in nearly three months. This decline was influenced by a notable drop in technology stocks, including a significant 4% fall in Apple’s value after Barclays downgraded the iPhone maker.

The technology sector, which had been a strong performer in the previous year, was especially impacted. Investors, who had been optimistic about easing monetary policy in 2024, started selling off tech stocks amidst ongoing economic uncertainties and unclear expectations about the Federal Reserve’s interest rate policies. This led to losses in other major tech companies like Nvidia, Tesla, and Meta. Additionally, the U.S. 10-year Treasury yield approached the 4% mark, adding to the market’s concerns.

Despite the recent downturn, market analysts remain optimistic about the market’s longer-term prospects. They note that short-term corrections are common, especially after a strong market performance, as seen in the previous year. In 2023, the S&P 500 and the Nasdaq had impressive gains, with the latter having its best year since 2020. Analysts expect the market to remain positive in the six to twelve-month horizon.

Investors are closely monitoring upcoming economic data and Federal Reserve policies for further market guidance. Key reports such as the minutes from the Federal Reserve’s December policy meeting, the job openings report, and December’s ISM manufacturing data are highly anticipated. These reports will provide insights into the state of the economy and potential future actions by the Federal Reserve, particularly regarding interest rate adjustments. This data is crucial in shaping market expectations and investor strategies in the coming days.

Wednesday Economic Events:
MBA Mortgage Applications 7:00am ET
Redbook Sales 8:55am ET
JOLTS 10:00am ET – High Volatility Expected
ISM Mfg PMI 10:00am ET – High Volatility Expected
FOMC Minutes 2:00pm ET – High Volatility Expected
API Crude Oil Data 4:30pm ET

Fed Speaker Scheduled:
Thomas Barkin 8:30am ET

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