Stock futures play a crucial role in predicting market trends. On Monday night, they were near flat despite the S&P 500 achieving an all-time closing high in December's trading month. S&P 500 futures and Nasdaq 100 futures remained close to their flatlines, while Dow Jones Industrial Average futures lost 26 points or around 0.1%. This follows a mixed session on Wall Street where both the broad S&P 500 and technology-heavy Nasdaq Composite closed at records after hitting fresh intraday highs. However, the Dow ended more than 100 points or about 0.3% lower, even though it briefly topped the closely watched 45,000 level during the day.
Key Data Releases and Their Implications
Investors are closely watching Tuesday's October jobs report as it is the first in a series of data releases expected this week, providing insights into the strength of the labor market. The main event will be Friday's November payrolls report. This data arrives ahead of the Federal Reserve's policy meeting on Dec. 17-18. Fed funds futures currently price in a nearly 75% probability of a central bank interest rate cut during the policy gathering, according to CME's FedWatch Tool. "Labor is very important," said Sam Stovall, chief investment strategist at CFRA Research. "But we should not see anything that would upend investors' expectations that the Fed will cut rates again in December." Traders will also monitor Tuesday speeches from Fed Governor Adriana Kugler and Chicago Fed President Austan Goolsbee slated for the afternoon.Analysis of the Federal Reserve's Role
The New York Fed is uniquely important in the Federal Reserve as it implements monetary policy for the Federal Open Market Committee, acts as the main agent for the central bank to intervene in the currency market, and its president is a permanent member of the FOMC. New York Federal Reserve President John Williams said on Monday that there is more work to be done on the battle against inflation. "Inflation remains above our 2% longer-run target, and it will take some time to achieve our inflation goal on a sustained basis," he said. However, he also mentioned that there are "reasons to be confident" that inflation will hit 2% on an annualized basis. Fed Governor Christopher Waller had previously said he was expecting another interest rate cut at the central bank's next policy meeting scheduled for later this month, but he was concerned about recent inflation trends.Bond Market's Impact on Stocks
One corner of the bond market is flashing a bullish signal for stocks, according to Jason Hunter, head of technical strategy at JPMorgan. The 10-year breakeven inflation rate is contained within a range below 2.40% and 2.50%, suggesting that inflation fears are contained and is a positive signal for the stock market. "You're already starting to see that broadening and the breadth start to expand," Hunter said. He expects the next big upside target for the S&P 500 late this year or early next to be 6,195. The broad market index was last hovering below 6,050. He is positive on the S&P 500 Equal Weight and Russell 2000.After-Hours Stock Movements
These are some of the stocks moving in after-hours trading on Monday. Tesla, the electric vehicle maker, slipped 1.7% after a Delaware judge denied the reinstatement of CEO Elon Musk's $56 billion pay package. The judge upheld her prior ruling on the case. Zscaler, the cloud security stock, dropped 7.2% as guidance for the fiscal second quarter disappointed investors. Zscaler sees adjusted earnings ranging from 68 cents to 69 cents per share, roughly in line with analysts' forecasts. Credo Technology Group, the technology stock, surged 32.8% after the company topped earnings expectations and posted strong guidance for current-quarter revenue. Credo reported 7 cents per share, excluding items, on $72 million in revenue for the second fiscal quarter. Analysts had forecast earnings of 5 cents per share and revenue of $67 million.Overall Market Outlook
Even global investors are preferring U.S. equities over their international counterparts, according to Morgan Stanley. The firm's global director of research cited recent conversations with investors at an Asia Pacific summit. "Overall, we expect a balanced earnings recovery across sectors, supported by favorable conditions such as subdued interest rates and broadening EPS growth," the bank wrote in a note from Sunday. The bank added that it is currently overweight financials in the U.S., citing "anticipated earnings improvement, accelerating capital markets activity, and potential regulatory relaxations post-election." On the other hand, high price levels and interest rates have contributed to an underweight within the U.S. consumer goods sector.READ MORE