U.S. stock futures steady as Nasdaq falls for fourth straight day
The U.S. stock futures showed little change on Wednesday night after the Nasdaq Composite experienced a fourth consecutive day of decline. The Dow Jones Industrial Average futures saw a modest rise of 35 points, or 0.09%, while the S&P 500 futures and Nasdaq 100 futures ticked higher by 0.09% and 0.1% respectively. This comes after a disappointing trading session that saw all three major averages closing with losses. The Dow Jones dropped nearly 300 points, or 0.8%, while the S&P 500 and Nasdaq Composite fell by 0.8% and more than 1% respectively.
Dow Jones futures rise slightly, while S&P 500 and Nasdaq tick higher
Dow Jones Industrial Average futures enjoyed a slight increase of 35 points, or 0.09%, on Wednesday night. Similarly, S&P 500 futures and Nasdaq 100 futures saw a marginal tick higher by 0.09% and 0.1% respectively. Wall Street had a less favorable trading session the day before, with all three major averages closing with losses. The Dow Jones dropped almost 300 points, or 0.8%, while the S&P 500 and Nasdaq Composite experienced similar declines of 0.8% and over 1% respectively.
Tech stocks, including Apple, face underperformance in the new year
Mega-cap tech stocks, such as Apple, have been underperforming at the beginning of the new year as investors grow increasingly concerned about overstretched valuations and the uncertainty surrounding potential rate cuts by the Federal Reserve. Apple shares have fallen more than 4% this week. The accelerated technological advancements and the proliferation of remote work during the pandemic led to an unprecedented surge in stock valuations for many tech companies in the previous year. However, with markets potentially getting overly optimistic, investors are apprehensive about the sustainability of these valuations.
S&P 500 and Nasdaq Composite post impressive gains in 2023
In 2023, the S&P 500 recorded an impressive rally of over 24%, marking its best weekly winning streak since 2004. Meanwhile, the Nasdaq Composite witnessed a staggering jump of 43%, representing its best year since 2020. The remarkable gains were driven by the strong performance of several sectors, including technology, energy, and consumer discretionary. The S&P 500’s robust performance can be attributed to a combination of factors, such as robust corporate earnings, accommodative monetary policies, and an improving economic outlook. The Nasdaq Composite, heavily composed of technology stocks, benefited from the continued digital transformation and increasing reliance on technology in various sectors.
Investors anticipate give back in markets following strong finish to the year
The investment community is currently bracing for a potential pullback in the markets after a strong finish to the previous year. Various factors, such as stretched positioning and heightened investor sentiment, have led to concerns about a possible correction. Anastasia Amoroso, chief investment strategist at iCapital, highlighted this sentiment, stating that the market had experienced a notable surge towards the end of the year and was due for some give back. While the market’s recent losses raise cautionary flags, it is important to note that a healthy correction can help realign valuations and establish a more sustainable growth trajectory. It remains to be seen how the markets will evolve in the coming days and weeks.
Economic data and earnings on the horizon
On the economic front, investors are eagerly awaiting the release of the December ADP private payrolls report on Thursday morning. Economists surveyed by Dow Jones expect the report to show a rise of 130,000 jobs last month, compared to 103,000 in the previous month. Additionally, Walgreens Boots Alliance is set to announce its earnings on Thursday before the market opens. The market will be closely monitoring these events for further insights into the health of the job market and the performance of the retail sector.
Analyst comment
1. # U.S. stock futures steady as Nasdaq falls for fourth straight day: Negative news. The market is likely to continue experiencing volatility and potential downward pressure as the Nasdaq Composite continues to decline.
2. Dow Jones futures rise slightly, while S&P 500 and Nasdaq tick higher: Neutral news. The market is expected to remain relatively stable with slight upward movement.
3. Tech stocks, including Apple, face underperformance in the new year: Negative news. Investors are concerned about overvalued tech stocks and potential rate cuts, leading to underperformance.
4. S&P 500 and Nasdaq Composite post impressive gains in 2023: Positive news. The market has recorded significant gains driven by various sectors, indicating a strong performance.
5. Investors anticipate give back in markets following strong finish to the year: Neutral news. Investors expect a potential pullback after a strong year-end finish, which could lead to a healthy correction.
6. Economic data and earnings on the horizon: Neutral news. Investors are awaiting economic data and earnings reports for further insights, which could impact market sentiment.
