U.S. stocks could get off to a positive start on Monday amid upbeat investor sentiment spurred the Dow Jones to close at a new record high on Friday.
Donald Trump's Treasury Secretary pick, Scott Bessent, has been cheered by investors. The hedge fund manager told the Wall Street Journal in an interview that he will make Trump's first-term tax cuts permanent, while also eliminating taxes on tips, social security benefits, and overtime pay, fulfilling the President-elect's election promises.
Expectations of a further 25 basis point rate cut in December have fallen to just 56% now, down from 75% a month ago, according to CME Group's FedWatch tool.
| Futures | Performance (+/-) |
| Nasdaq 100 | 0.58% |
| S&P 500 | 0.49% |
| Dow Jones | 0.68% |
| R2K | 1.12% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) was up 0.54% to $598.72 and the Invesco QQQ ETF (NASDAQ:QQQ) rose 0.64% to $509.01, according to Benzinga Pro data.
Cues From Last Week:
Major indices on Wall Street recorded gains last week, with the Dow gaining around 2% and the S&P 500 adding around 1.7%. The tech-heavy Nasdaq also registered gains to close up by nearly 1.6%, despite volatility as investors digested Nvidia Corp. (NASDAQ:NVDA) earnings.
On the economic data front, the S&P Global US Services PMI climbed to 57 in November versus 55 in the previous month, while manufacturing PMI increased to 48.8 in November from 48.5 in the previous month.
The University of Michigan consumer sentiment for the US fell to 71.8 in November versus a preliminary reading of 73.
Most sectors on the S&P 500 closed on a positive note, with industrials, financials, and consumer discretionary stocks recording the biggest gains on Friday.
However, utilities and communication services stocks bucked the overall market trend, closing the session lower.
| Index | Week’s Performance (+/-) | Value |
| Nasdaq Composite | 1.64% | 19,003.65 |
| S&P 500 | 1.7% | 5,969.34 |
| Dow Jones | 2.18% | 44,296.51 |
| Russell 2000 | 4.54% | 2,406.67 |
Insights From Analysts:
Wells Fargo analysts have expressed optimism about food inflation cooling down further over the coming weeks, but that it could be less noticeable now than it has been over the last two years.
"Few Americans may include a slower pace of food price growth on their list of things to be grateful for this year, but our team does expect consumer price inflation for food to continue to quiet down over time—just less noticeably than has been seen over the past two years," the analysts said in a recent note.
Ryan Detrick, chief market strategist at Carson Group, continued to remain bullish on equities.
"Various advance/decline lines show no major signs of deterioration. This continues to suggest the bull market is alive and well."
He added that investors who expect a correction after the S&P 500 gained 20% for two years in a row do not have history on their side. In eight of the previous such instances, the S&P 500 gained an average of 12.3% in the third year, according to data compiled by Detrick.
Nathan Peterson, Director of Derivatives Analysis at the Schwab Center for Financial Research, laid out the thesis for market movements for the next week.
"Taking everything into consideration, bullish seasonality, bullish technicals, a strong fundamental backdrop and a friendly Fed leave me in the bullish camp for next week," Peterson said.
This week will have a shorter trading window due to Thanksgiving, which could mean lower volume but higher volatility.
"From a seasonality perspective, November is a bullish month for stocks and ‘Thanksgiving Week’ tends to be an up week more often than not."
See Also: How To Trade Futures
Upcoming Economic Data
This week's economic calendar is not as packed as last week's due to Thanksgiving.
- On Tuesday, the S&P Case-Shiller home price index for 20 cities will be released at 9 a.m. ET.
- Data on consumer confidence and new home sales will be released at 10 a.m. ET.
- The minutes of the Fed’s November FOMC meeting will be released at 2 p.m. ET.
- On Wednesday, initial jobless claims, advanced durable goods orders, U.S. trade balance, retail and wholesale inventories, and the first revision of GDP will be released at 8:30 a.m. ET.
- Chicago Business Barometer (PMI) will be released at 9:45 a.m. ET.
- Nominal personal income and spending data will be released at 10 a.m. ET.
- PCE index and pending home sales data will be released at 10 a.m. ET.
No major economic reports are scheduled for Monday, Thursday, and Friday this week.
Stocks In Focus:
- MicroStrategy Inc. (NASDAQ:MSTR) stock surged by more than 5% in premarket trading on Monday as Bitcoin (CRYPTO: BTC) inched closer to the $100,000 mark.
- Super Micro Computer Inc. (NASDAQ:SMCI) stock was up nearly 7% in premarket trading after the company submitted a plan last week to be in compliance once again with the listing requirements to trade on the Nasdaq.
- Snowflake Inc. (NYSE:SNOW) stock rose over 3.6% in premarket trading after the company was upgraded to "Outperform" by brokerage firm Wedbush.
- Palantir Technologies Inc. (NASDAQ:PLTR) stock gained 3% in premarket trading after Wedbush upgraded its price target for the company to $75 from $57.
- Robinhood Markets Inc. (NASDAQ:HOOD) stock surged 4% in premarket trading after analysts at Morgan Stanley increased the price target to $55 from $24.
- Investors are awaiting earnings results from Bath & Body Works, Inc. (NYSE:BBWI), Agilent Technologies, Inc. (NYSE:A), and Zoom Video Communications, Inc. (NASDAQ:ZM) today.
Commodities, Bonds And Global Equity Markets:
Crude oil futures fell in the early New York session, declining 0.29% to hover around $71.03.
The 10-year Treasury note yield eased to 4.351%.
Major Asian markets ended mixed on Monday, while European markets edged up in early trading.
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Photo courtesy: Wikimedia
