Wall Street Looks To Extend Rally Amid Caution Over Fed Speeches, More Earnings: Why This Analyst Thinks Bull Market Is Still 'Quite Young'

U.S. stocks are likely to extend their gains as major index futures are modestly higher on Monday. Strong earnings reports continue to support the market, with S&P 500 earnings expected to grow by 5% year-over-year — the highest rate since Q2 2022. The possibility of rate cuts has re-emerged, making this week’s flurry of Fed speeches potentially market-moving events. Analysts are confident the upward momentum will continue after a slow April, with the typical strength seen in election years (over the next three months) likely aiding the rally.

Cues From Previous Session 

A dovish Federal Reserve message, benign economic data, and positive earnings reports fueled the market rally for a second consecutive week. All three major indices closed the week ending May 3 firmly in positive territory. While Fed Chair Jerome Powell didn’t provide a specific timeline for rate cuts, he reassured investors by clarifying that hikes are not on the immediate horizon. Big tech companies like Apple, Inc. (NASDAQ:AAPL) and Amazon, Inc. (NASDAQ:AMZN) met analyst expectations with their earnings reports.

The Institute for Supply Management’s service sector reading fell sharply and dipped into contraction territory. However, the monthly non-farm payrolls report offered mixed signals: lower-than-expected job growth in April, a slight increase in the unemployment rate, and slower-than-expected wage growth.

Insights From Analysts:

An analyst highlighted data that increases the confidence in the current market rally. Carson Group’s Ryan Detrick said the current bull market was still quite young. As opposed to the average duration of 60 months for the past 12 bull markets, the current one is less than 19 months old, he said. On a more positive note, if the bull market starts in October, its average is even a litter bit longer, he added.

Upcoming Economic Data:

A slew of Fed speeches are scheduled for the unfolding week, while the jobless claims data, the University of Michigan’s preliminary consumer sentiment index for May, the Fed’s outstanding consumer credit report for March, and the monthly federal budget for April may also attract some attention.

On Monday, the Treasury will auction three- and six-month notes at 11:30 a.m. EDT.

Richmond Fed President Thomas Barkin is scheduled to speak at 12:50 p.m. EDT. New York Fed President John Williams will speak at 1 p.m. EDT.

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Stocks In Focus:

• Paramount Global (NASDAQ:PARA) shares rose about 4% in premarket trading after the New York Times reported that the media company will end its exclusive negotiations with Skydance Media without reaching a deal.
• BioNTech SE (NASDAQ:BNTX), Spirit Airlines, Inc. (NYSE:SAVE), TreeHouse Foods, Inc. (NYSE:THS), and Tyson Foods, Inc. (NYSE:TSN) are among the notable companies reporting ahead of the market open.
• Those reporting after the close include ADTRAN Holdings, Inc. (NASDAQ:ADTN), Coty Inc. (NYSE:COTY), Fidelity National Information Services, Inc. (NYSE:FIS), FMC Corporation (NYSE:FMC), J&J Snack Foods Corp. (NASDAQ:JJSF), Lucid Group, Inc. (NASDAQ:LCID), Lumentum Holdings Inc. (NASDAQ:LITE), Palantir Technologies Inc. (NYSE:PLTR), Microchip Technology Incorporated (NASDAQ:MCHP), The Williams Companies, Inc. (NYSE:WMB), $Vornado Realty Trust(VNO-N)$ (NYSE:VNO)

Commodities, Bonds, and Global Equity Markets:

Crude oil futures sharply early Monday, trading a little under $79 a barrel. The commodity fell nearly 7% in the week ended May 3. Gold futures also gained ground.

Bond yields weakened further at the start of the new week, with the 10-year note yielding 4.473%.

Bitcoin (CRYPTO: BTC) saw an upward bounce and has tacked on about 2% over the past 24 hours. At last check, the apex crypto was approaching the $65,000 level.

Asian stocks rose across the board, as they latched onto the optimism regarding rising prospects of a U.S. Fed rate cut. The Chinese market witnessed standout gains after the policymakers said at last week’s Politburo meeting that they would step up support for the economy with prudent monetary and proactive fiscal policies.

The New Zealand market, however, bucked the trend and fell sharply on Monday. The Japanese and South Korean markets remained closed for public holidays.

Sentiment across the Atlantic was positive, with the major European averages firmer in early trading.

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