Due to traders waiting for a large amount of data, there is a high possibility of a decline in US stocks. 🤔

2024/12/10 20:09

US stock futures fell before Tuesday's market opening, while the dollar rose to 106.357 level.
The yields on 10-year and 2-year Treasury bonds were 4.21% and 4.13% respectively. According to CME Group's FedWatch tool, the expectation of a further 25 basis point rate cut in December has increased from 72.9% a week ago to 86.1%.
According to Willie Delwiche, the CMT at CFA, the S&P 500 index recorded a negative range for the 6th consecutive day on Monday. He mentioned, "This matches the longest consecutive negative range since recording 8 consecutive days of negative range in December 2018."
The Consumer Price Index for November, to be released on Wednesday, is expected to provide insight into inflation trends. Federal Reserve officials are currently approaching the December meeting and entering a blackout period.

Futures Performance (+/-)
NASDAQ 100 -0.06%
S&P 500 -0.07%
Dow Jones -0.04%
Russell 2000 0.02%
According to Benzinga Pro data, in pre-market trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE: SPY) dropped by 0.02% to $604.58, while the Invesco QQQ Trust ETF Trust (NASDAQ: QQQ) dropped by 0.03% to $522.21.
Clues from the previous session

The US stock market fell on Monday, with the S&P 500 and NASDAQ Composite retreating from recent record highs. Led by declines in NVIDIA (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD), the technology sector faced significant obstacles.
As a result of China's regulatory authorities investigating potential violations of antitrust laws, Nvidia's stocks fell by over 2%. Meanwhile, AMD dropped nearly 6% due to a downgrade from BofA Securities.
Despite the Monday drop, the S&P 500 and NASDAQ rose by 0.96% and 3.34% respectively over the past 3 weeks. However, the Dow Jones fell by 0.6% during the same period.
On the economic front, wholesale inventories in the USA increased slightly in October, as expected.

Although most sectors of the S&P 500 declined, health care and real estate stocks went against the trend, closing the day in positive territory.
Index Performance (+/-) Value
NASDAQ Composite -0.62% 19,736.69
S&P 500 -0.61% 6,052.85
Dow Jones -0.54% 44,401.93
Russell 2000 -0.67% 2,392.84
Insights from Analysts:

Jeremy Siegel stated that regarding the future interest rate decisions of the FOMC, "A 25 basis point cut in December and a strong signal to pause further easing, an expectation of a so-called hawkish rate cut, are anticipated."
Siegel, a Senior Economist at WisdomTree and an Honorary Professor of Finance at the Wharton School of the University of Pennsylvania.
"While the one-year inflation expectations at the University of Michigan surged to 2.9%, inflation continues to be contained,
requiring continued vigilance, with the potential to reflect concerns about Trump's tariff policies," added the same individual.
"According to the US employment statistics for November, the economy is steadily increasing employment. As per Blackrock's report, wage growth exceeds the inflation rate settling around the 2% target of the FRB. This is why a significant rate cut by the FRB is not observed."

According to Siegel, "stocks are still strong," but with a P/E ratio at 22 times, he mentioned that "valuations are not cheap."
"Investors should be cautious about becoming overly enthusiastic in December," he added, stating that "while the first quarter is expected to improve, the next few weeks could be subdued and quite disappointing." Siegel also stated that, "... 2025 is unlikely to be as robust a market as 2023 and 2024."
Blackrock stated in the report, "Strong economic growth, broad revenue growth, and high-quality trends support our beliefs." Additionally, it pointed out that "US stocks are overweight compared to other regions."
Blackrock stated, "We believe that opportunities are emerging throughout the sector due to the construction and adoption of AI. We are leveraging beneficiaries outside the technology sector."

"While Big Tech valuations are supported by strong earnings, valuations in other sectors are not as high," the same report added.
Mr. Siegel also stated that the improvement in productivity through AI will impact the growth trends in 2025. He said, "AI cannot yet replace all forms of labor, but its impact on sectors like middle management and transportation may bring both risks and returns to forward-looking investors, potentially ushering in transformations."

Upcoming Economic Data
This week's economic calendar is full of important data releases that will assist investors in formulating future plans and strategies.
November data on the NFIB Optimism Index will be released at 6:00 AM Eastern Standard Time on Tuesday.
Revised US productivity data for the 3rd quarter is scheduled to be released at 8:30 AM Eastern Standard Time.
On Wednesday, November's headlines and Core Consumer Price Index data are scheduled to be released at 8:30 am Eastern Standard Time.
Monthly data on the US federal budget will be released at 2:00 pm Eastern Standard Time.
On Thursday, data on initial jobless claims until December 7th, as well as Core and Major Producer Price Index for November, are scheduled to be released at 8:30 am Eastern Standard Time.
Import price index data will be released at 8:30 am Eastern Standard Time on Friday.