The stock market is showing strong signs of growth, with the S&P 500 on track to set another record. A combination of positive earnings reports, stable bond markets, and a monetary boost in China has boosted investor risk appetite.
Stock-Index Futures Trading
Here’s how the stock-index futures are performing:
- S&P 500 futures (ES00) rose by 22 points or 0.4% to reach 4917
- Dow Jones Industrial Average futures (YM00) increased by 63 points or 0.2% to reach 38152
- Nasdaq-100 futures (NQ00) climbed by 132 points or 0.7% to reach 17663
Recent Market Performance
On Tuesday, the Dow Jones Industrial Average fell by 96 points or 0.25%, closing at 37905. Meanwhile, the S&P 500 saw a gain of 14 points or 0.29% to close at 4865, and the Nasdaq Composite gained 66 points or 0.43% to close at 15426.
Tech Sector Leading the Way
Technology stocks are once again poised to lead Wall Street higher. Netflix’s impressive premarket trading performance, which resulted in a 10% jump, has provided a positive start to the tech sector’s earnings season.
Kathleen Brooks, research director at XTB, emphasized the significance of Netflix’s performance: “Although Netflix is not one of the Magnificent 7, it is still seen as a bellwether for the tech sector and the health of the U.S. consumer.”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, echoed this sentiment, stating, “Netflix has fired the starting gun on consumer-led earnings and shown the crowds that things are looking promising.”
Importance of High-Profile Earnings
As the S&P 500 reaches record levels, investors are attaching greater importance to the earnings and forecasts of prominent companies. Positive results from companies like Netflix are expected to have a favorable impact on major U.S. indices.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, suggests, “Strong Netflix results will likely give a positive spin to the major U.S. indices.”
U.S. Companies Reporting Earnings
Several major U.S. companies are set to report their earnings on Wednesday. AT&T (T), Abbott Laboratories (ABT), and Freeport-McMoRan (FCX) will announce their numbers before the opening bell. Later in the day, tech heavyweights such as Tesla (TSLA), IBM, and Lam Research (LRCX) will release their earnings after the market closes.
Positive Outlook for Chip Sector
The chip sector is expected to receive a boost following the positive results from Dutch company ASML. ASML, a maker of lithography systems for the semiconductor industry, reported well-received earnings. This news led to a 5% increase in the company’s stock during European trading.
Bond Market Conditions
The bond market continues to show stability, with the 10-year yield settling around 4.1%. After a tumultuous period of fluctuations, this level indicates that investors have grown more comfortable with inflation, economic growth, and the Federal Reserve’s policy decisions.
Key Events for Bonds
Today, there are two potential catalysts that could impact the bond market. The S&P flash U.S. services and manufacturing PMI reports are scheduled for release at 9:45 a.m. Eastern time. Additionally, the Treasury will hold an auction for $61 billion of 5-year notes at 1 p.m.
China Boosts Global Risk Appetite
In late Asian trading, China’s central bank announced measures to increase liquidity by reducing reserve requirements for banks. This news sparked a second consecutive day of significant gains for Chinese equities, further boosting global risk appetite.