US stocks may shake off geopolitical concerns on Monday and aim for a rebound after a week of weakness, as traders eagerly anticipate the next earnings season. Despite tensions between Iran and Israel, diplomatic efforts to ease the crisis appear to reassure the market, minimizing its impact.
After two consecutive weeks of declines, traders may see the opportunity to hunt for bargains before the reporting season begins. Key factors influencing the direction of the market today include earnings from major banks and the April retail sales report.
Futures performance on Monday (at 6:50 a.m. EDT)
| Futures | Performance (+/-) |
| Nasdaq100 | +0.59% |
| S&P500 | +0.47% |
| Dow | +0.27% |
| R2K | +0.20% |
Insights from last week’s trading:
U.S. stocks retreated in the week ending April 12, as hotter-than-expected inflation data and a sluggish start to big banks’ earnings generated selling pressure. The major averages all closed lower for the second consecutive week, with the Dow Industrials falling in all five sessions of the week.
The small-cap sector also saw extreme negativity as the “long-term upside” signals presented by the inflation data turned out to be negative for these stocks.
| Index | Performance inside Week ending April 12 (+/-) |
Value |
| Nasdaq composite | -0.45% | 16,175.09 |
| S&P 500 Index | -1.56% | 5,123.41 |
| Dow Industrials | -2.37% | 37,983.24 |
| Russell 2000 | -2.92% | 2,003.17 |
Insights from analysts:
One tech bull said the sell-off in the tech sector is not a signal to throw in the towel on the sector. Wedbush Analyst Daniel Ives The recent “risk-off environment and tech sell-off represent a clear buying opportunity in the upcoming tech earnings season,” it said in a note.
“Our view is that technology stocks will rise for the remainder of the year not because of multiples, but as growth and earnings accelerate relative to market expectations, with a key first-quarter earnings season behind the angle that will lay the foundation for the next rally in tech stocks,” he added.
Ives sees the first quarter as a major positive catalyst for tech stocks, as he forecast an incremental gain of 15% for the year.
Fund manager Louis Navellier is positive about the broader market. “Bargain hunting is going on in the market, but when earnings start coming out in the third week of April, things will stabilize very quickly,” he said.
Upcoming economic data:
Results from the New York Fed’s Empire State manufacturing survey for April will be released at 8:30 am, with economists, on average, expecting a reading of -10, suggesting continued contraction. Nonetheless, the contraction is expected to ease from what was implied by the -20.9 value recorded for March.
The Commerce Department will release its retail sales report for March at 8:30 a.m. EDT. Consensus estimates call for a 0.3% month-over-month increase in retail sales and a 0.5% increase in auto sales, excluding autos. In March the rate of increase in these parameters was 0.6% and 0.3%, respectively.
Also available are the Commerce Department’s Business Inventories Report for February and the National Association of Home Builders’ Housing Market Index for April. Both reports are due at 10 a.m. EDT. The housing market index, which is an indicator of homebuilder confidence, is expected to remain at 51. A reading above 50 indicates rising confidence.
The Treasury will auction the three- and six-month notes at 11:30 a.m. EDT.
President of the New York Fed John Williams is expected to make a television appearance at 8:30 a.m. EDT alongside the San Francisco Fed President Mary Daly will speak at 8pm EDT.
See also: How to trade futures
Featured actions:
- Tesla, Inc. TSLA fell in pre-market trading on rumors of job cuts of around 10%.
- The Apple company. AAPL fell more than 1% after a Bloomberg report flagged weak iPhone sales for the first quarter.
- Salesforce, Inc. CRM fell about 2.50% on news of a potential deal to buy Informatica.
- Goldman Sachs Group, Inc. GS AND M&T Bank Corporation MTBas well as Charles Schwab Corporation SW, are lined up to report earnings before the market opens.
Commodities, Bonds and Global Stock Markets:
Belying expectations of a sharp rally due to supply concerns, crude oil futures tumbled on Monday. At last check, a barrel of WTI-grade crude oil was down, about 1% below the $85 per barrel level. Gold, despite its appeal as a safe haven, slipped modestly to $2,366.60 an ounce.
After returning close to the psychological $60,000 level on Saturday, Bitcoin Bitcoin/USD bounced. At last check, the apex cryptocurrency was up about 3% and was last seen above the $66,500 level.
The main Asian markets, close to the Middle East, closed sharply lower. Most major indexes in the region saw declines, with the exception of China and Indonesia. China, in particular, has seen strong gains.
European stocks were also solidly in the green in early trading.
Read next: Will Bitcoin Slump to $20,000 Amid Rising Middle East Tensions? Peter Schiff does not rule out the possibility, citing a technical model
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