U.S. stock futures rose Tuesday as traders sought a fresh range-breaking catalyst.
How are stock-index futures trading
- S&P 500 futures ES00, +0.21% rose 13.5 points, or 0.3%, to 3,971.
- Dow Jones Industrial Average futures YM00, +0.47% added 112 points, or 0.3%, to trade at 33,848
- Nasdaq-100 futures NQ00, -0.40% climbed 27 points, or 0.2%, to 11,614
On Monday, the Dow DJIA, +0.54% fell 45 points, or 0.1%, while the S&P 500 SPX, +0.29% lost 0.4% and the Nasdaq Composite shed 1.1%. The S&P 500 is up 10.4% from its 2022 closing low hit on Oct. 12, but remains down 17.1% for the year to date.
What’s driving markets
Stock futures were a touch firmer but traders seemed reluctant to place bold bets as they weighed concerns about fresh COVID-19 restrictions in China and the prospects for tighter Federal Reserve policy.
Adding to the caution was a holiday-shortened week for Wall Street, where volumes traditionally tend to thin notably in the run up to Thanksgiving on Thursday and Black Friday.
“The irony is that the China reopening story has been a big positive driver of China-related risk and overall markets over the last couple of weeks, so we are trading between feast and famine on this story,” wrote Jim Reid, strategist at Deutsche Bank, in a morning note.
“Both could of course be ultimately right. There might be many more restrictions in the near term but stronger more durable re-openings by the spring. Markets are struggling to price this at the moment though,” Reid added.
The lackluster action in stocks also reflects a market that has stalled following a rally off 2022 lows, and as investors look to the next catalyst to help push the S&P 500 out of its recent relatively tight range of roughly 50 points, on a closing basis, held over the past two weeks.
The ceiling of that range is 4,000, and unfortunately for equity bulls it is unlikely the S&P 500 will finish much above it even in a year’s time, according to Goldman Sachs.
In a note published late on Monday, the Goldman strategy research team led by David Kostin, said that assuming the U.S. economy manages a soft landing then the stock market will experience “less pain but also no gain” in 2023.
“The performance of U.S. stocks in 2022 was all about a painful valuation de-rating but the equity story for 2023 will be about the lack of EPS growth. Zero earnings growth will match zero appreciation in the S&P 500. Our valuation model implies an unchanged P/E multiple of 17x and a year-end index level of 4000,” said Kostin.
Emblematic of the market’s travails over the past year or so are the share price collapses of former lockdown-linked work from home darlings, such as Zoom Video Communications Inc. ZM, -9.54%. Stock in the videoconferencing group was off about 9% in premarket trading having delivered soft fourth quarter guidance after Monday’s closing bell.
Kansas City Fed President Esther George is due to speak at 2:15 p.m. ET.
There are no U.S. economic updates of note set for release on Tuesday, while a raft of data are due Wednesday, including minutes of the Fed’s November policy meeting.
Companies in focus
- Dick’s Sporting Goods Inc. DKS, +0.87% stock initially dipped but rebounded in premarket trading Tuesday after releasing its third quarter earnings. Shares in the retailer are up 0.91, or 0.85%, after the company beat estimates with positive same-store sales and offered a rosy outlook.
- Dell Technologies Inc. DELL, +2.46% shares were off 3%, following quarterly earnings released after Monday’s trading session. While earnings beat estimates, the company’s fourth quarter revenue expectations were lower than analyst expectations.
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