U.S. stock futures surge amid cautious trading – Stock futures in the United States rise as traders look for new range-breaking catalysts.
What is stock-index futures trading?
- S&P 500 futures E00, 0.2% rose 10 point, or 0.2% to 3968
- Dow Jones Industrial Average futures HTML 00, 0.20% increased 77 points or 0.2% to 33812
- Futures NQ00 on Nasdaq 100, 0.17% rose 28 points, or 0.2% to 11616
Monday’s Dow Jones Industrial Average DJIA fell 45 points or 0.13% to 33700. The S&P 500 SPX, -3.39 lost 15 points or 0.39% to 3950. And the Nasdaq composite COMP, 1.09 dropped 122 to 1.09% to 11025. Although the S&P 500 has increased 10.4% since its Oct. 12 closing low of 2022, it is still down 17.1% for the entire year.(U.S. stock futures surge amid cautious trading)
What is driving the markets?
Stock futures were slightly firmer, but traders were reluctant to make bold bets because they were concerned about new COVID-19 restrictions in China as well as the prospect of tighter Federal Reserve policies.(U.S. stock futures surge amid cautious trading)
Wall Street was also warned by the holiday-shortened week. Wall Street volumes tend to be lower in the weeks leading up to Thanksgiving and Black Friday.(U.S. stock futures surge amid cautious trading)
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Jim Reid, strategist at Deutsche Bank, wrote in a morning note that “The irony of it all is that the China opening story has been an important driver of China-related risks and overall markets over these last few weeks so we are trading between feast or famine on this story.”
“Both could be right in the end. While there might be more restrictions in the short term, the spring will see stronger and more lasting re-openings. Reid said that markets are not able to price it right now, but they will in the future.”(U.S. stock futures surge amid cautious trading)
Stocks are showing a lackluster performance. This is also a result of a market that has stalled after a rally from 2022 lows. Investors look for the next catalyst to push the S&P 500 beyond its current tight range of approximately 50 points (on a closing basis) over the past two weeks.
According to Goldman Sachs, the ceiling for that range is 4,000. Equity bulls should be aware that it is unlikely that the S&P 500 will surpass it in a year.(U.S. stock futures surge amid cautious trading)
The Goldman strategy research team, led by David Kostin published a note late Monday that stated that, if the U.S. economy has a soft landing, then the stock market would experience “less pain, but also no gain” for 2023.(U.S. stock futures surge amid cautious trading)
“The U.S. stock performance in 2022 was all about a painful value de-rating, but the equity story of 2023 will be about the absence of EPS growth. Zero earnings growth will equal zero appreciation in S&P 500. Kostin stated that our valuation model assumes an unchanged P/E multiple (17x) and a year end index level (4000).
The share price collapses in the shares of ex-lockdown-linked work-from-home darlings Zoom ZM are a clear sign of the market’s woes over the past year. Premarket trading saw the stock in the videoconferencing group fall by about 9% after it delivered soft fourth-quarter guidance on Monday. (U.S. stock futures surge amid cautious trading)
No U.S. economic update of note is scheduled for Tuesday. At 2:15 p.m., Esther George, Kansas City Fed President, will speak.
“The U.S. stock performance in 2022 was all about a painful value de-rating, but the equity story of 2023 will be about the absence of EPS growth. Zero earnings growth will equal zero appreciation in S&P 500. Kostin stated that our valuation model assumes an unchanged P/E multiple (17x) and a year end index level (4000).
