S&P 500 (SPY) Report – 01/30/24

Good morning, traders!

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

U.S. stock futures experienced a slight decline on Tuesday as investors anticipated key earnings reports from major tech companies. The S&P 500 and Dow Jones Industrial Average futures both saw a marginal drop, while Nasdaq 100 futures remained steady. This movement comes as the stock market holds near record highs, with investors particularly focused on the performance of big tech firms, commonly referred to as the “Magnificent Seven.” These companies, excluding Tesla, are expected to significantly impact the S&P 500’s earnings season, and there’s keen interest in Microsoft’s report for indications of returns on its AI investments. Other major tech companies like Alphabet, Apple, Amazon, and Meta are also scheduled to release their earnings reports later in the week.

Tuesday also saw General Motors release its earnings, surpassing expectations and causing a nearly 8% rise in its premarket shares. This is part of a broader trend of mixed corporate earnings reports, where some companies like F5 and Sanmina reported better-than-expected results, boosting their stock prices, while others like Whirlpool and JetBlue witnessed declines due to less favorable outlooks. According to Keith Buchanan from Globalt Investments, this earnings season doesn’t show a uniform trend, presenting a mix of clear winners and losers.

In addition to corporate earnings, investors are closely watching the Federal Reserve’s policy meeting, which started on Tuesday and will conclude with a decision on interest rates. The market, as indicated by the CME FedWatch tool, expects a high probability that the Federal Reserve will maintain current rates. However, the longer-term expectation centers around whether rate cuts will commence in March or May, as traders and analysts speculate on the Fed’s plans in the context of the economy’s performance and historical precedents.

Experts like Nicholas Colas from DataTrek Research suggest that the Federal Reserve might not meet market expectations for significant interest rate cuts unless the economy faces a recession. Colas notes that substantial rate cuts have historically occurred during recessions and cautions against overly optimistic market expectations. He predicts that the Fed will likely adhere to a more conservative plan of moderate rate reductions, unless economic conditions deteriorate markedly. This cautious stance by the Fed reflects a knowledge of past market dynamics and a focus on preventing overconfidence that could lead to market instability.

Tuesday Economic Events:
Redbook Sales 8:55am ET
CaseShiller HPI 9:00am ET
FHFA HPI 9:00am ET
Consumer Confidence 10:00am ET – High Volatility Expected
JOLTS 10:00am ET – High Volatility Expected
API Crude Oil Data 4:30pm ET

Fed Speaker Scheduled:
No Fed Speakers Scheduled

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