U.S. stock futures rose on Monday, pushing the S&P 500 index toward a new all-time high as investors grew optimistic about the health of the economy and focused on future earnings for signs of an AI boom from tech companies. I got on track.
S&P 500 (^GSPC) futures rose 0.3% on Friday after the index posted its highest closing price since January 2022. Dow Jones Industrial Average (^DJI) futures rose about 0.2%, while tech-heavy Nasdaq 100 (^NDX) futures rose 0.6%.
A rise in tech stocks driven by AI has lifted stock prices out of the doldrums seen in early 2024, with major indexes moving into positive territory in January. With that in mind, we'll be watching for quarterly results from companies like Netflix (NFLX) and Tesla (TSLA) later this week, as how tech companies' earnings could indicate where the market is heading in the near term. will be done.
At the same time, Fed officials whose comments influenced stock prices plan to remain silent ahead of the next policymakers meeting on January 30th. However, the release of GDP and Fed-recommended inflation indicators later in the week could shed some light on the debate. What's moving the market: When will the Fed cut interest rates?
read more: Impact of the Fed's interest rate hike suspension on bank accounts, CDs, loans, and credit cards
Individual stocks include Boeing (BA) after the FAA asked airlines to inspect another class of 737s that use the same door plug as the MAX 9 that caused the mid-air explosion. The pressure increased even more.
Meanwhile, Archer Daniels Midland (ADM) stock fell 12% in premarket. The agricultural products trading giant has placed its chief financial officer (CFO) on leave and lowered its earnings forecast as it faces an audit.
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Long break between record highs is bullish for stocks
The stock market closed at a record high on Friday.
Early Monday morning, futures were hinting at further gains.
And while regular readers will be familiar with the refrain that stocks typically rise at this point, history tells us that a two-year break to record highs is better for U.S. stocks than this. This supports the idea that it is a sign of things to come.
Keith Lerner, co-chief information officer at Trust Wealth, said in a note to clients on Monday that 13 out of the past 14 times the S&P 500 index has had at least a year between record closes, He pointed out that the index one year later was high. His average 12-month return over these periods was his 14%, well above the average annual return of about 10% realized by the S&P 500.
Lerner points out that the last time this failed was in May 2007. That's because a year later, the global financial crisis broke out amidst the collapse of the U.S. housing market under the weight of high interest rates. “This reiterates the importance of business cycles and the Fed's ability to maintain the soft economic landing that is now permeating the market,” Lerner said.
After long breaks between record closes, stocks tend to perform better than average over the next 12 months. (Source: Trust IAG, FactSet)
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