Wall Street Set For Cautious Start After Record Run Last Week: Fed Speeches, Manufacturing Data In Focus, Expert Flags Key Stock Catalyst

U.S. stocks are gearing up for a cautious start following last week’s record run, with the index futures currently showing mixed sentiment. Tech stocks could extend the strength but it remains to be seen if that pervades into the broader market. Market strategists are upbeat about the trajectory for the rest of the year and recommend judicious buying on dips.

In Monday’s session, traders may seek cues from a Fed speech and the results of a regional manufacturing survey. Some of them may prefer to move to the sidelines ahead of Tuesday’s retail sales report.

In premarket trading on Monday, the SPDR S&P 500 ETF Trust SPY edged down 0.05% to $542.49, while the Invesco QQQ ETF QQQ traded up 0.13% at $479.81, according to Benzinga Pro data.

Cues From Last Week:

Wall Street rode on the positive sentiment generated by the twin inflation reports released last week and positive tech earnings. Traders largely ignored the tempered rate-cut expectations following the Fed decision. The Nasdaq Composite and the S&P 500 Index recorded weekly gains, while the Dow Jones Industrial Average edged down for the week. Interest rate-sensitive small-cap stocks underperformed the major averages.

Insights From Analysts:

LPL Financial Chief Equity Strategist Adam Turnquist advised tactically buying the dips rather than chasing the latest unconfirmed breakout higher. He noted that the narrow leadership during the latest breakout has created notable divergences between price and market breadth. This does not suggest the bull market is over but it increases the risk of a pause or pullback unless a broader rotation develops, he said.

“Falling Treasury yields could provide a catalyst for stocks, provided they continue to decline on easing inflation data and not materially deteriorating economic conditions,” Turnquist said.

Broadening of the market rally would need a re-rating of Nvidia, according to Lumida Wealth’s Ram Ahluwalia. Until such the market breadth will likely remain weak, he said.

On the other hand, Evercore ISI analyst Julian Emanuel said the backdrop of slowing inflation, a Fed intent on cutting rates and growth support the Goldilocks scenario. He sees the AI frenzy and easing inflation to propel the S&P 500 to 6,000 by the year-end.

Upcoming Economic Data:

The truncated week will see the release of a few key economic reports and Fed speeches that could offer more clarity on the interest rate outlook. The May retail sales report due on Tuesday, a duo of regional manufacturing reports, national manufacturing and service sector readings, the May industrial production report, a trio of housing market readings, the weekly jobless claims report and a slew of Fed speeches are among the closely-watched catalysts.

• The New York Fed will release the results of its Empire State manufacturing survey at 8:30 a.m. EDT. Economists, on average, expect the index to remain in the negative zone, indicating contracting activity. The index for June is expected to come in at -10.5, up from -15.6 in May, suggesting a slower rate of contraction.
• The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.
• Philadelphia Fed President Patrick Harker speech is scheduled to speak at 1 p.m. EDT and Fed Governor Lisa Cook at 9 p.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

• Autodesk, Inc. ADSK shares rose over 4% in premarket trading after a Wall Street Journal report said -activist investor Starboard Value has bought a roughly $500 million stake in the company.
• La-Z-Boy Incorporated LZB and Lennar Corp. LEN are scheduled to release their quarterly results after the market close.

Commodities, Bonds And Global Equity Markets:

After the strong showing in the week ended June 14, crude oil futures were marginally lower and gold futures also slipped. The 10-year benchmark U.S. treasury yield rose 2.7 basis points to 4.24%.

Bitcoin BTC/USD, though up modestly, was trading below the $66K mark.

Asian markets fell across the board, although the Indian, Malaysian and Singaporean markets remained closed for the Eid al-Adha holiday. A slew of data released from China underlined the soft patch, with fixed asset investment, industrial production and house prices all coming in weaker than expected. Separately, the People’s Bank of China left a key interest rate unchanged, with the rate on 182 billion yuan worth of one-year medium-term lending facility loans maintained at 2.50%, in line with expectations.

European stocks showed tentativeness in early trading.

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