U.S. stocks are gearing up for a cautiously optimistic start on Wednesday after a late-session recovery led to a positive close in the previous session. Labor market data and service sector activity reading could set the tempo for the day’s trading direction. A soft private payroll number could prove to be a double-edged sword, depending on what traders choose to focus on. Bond yields remain subdued and but could see some volatility post the data. Positive reactions to earnings, specifically from the tech sector, could provide a lift to the space.
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.39% |
| S&P 500 | +0.20% |
| Dow | +0.13% |
| R2K | +0.05% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) slumped 0.20% to $529.44, and the Invesco QQQ ETF (NASDAQ:QQQ) traded up 0.42% at $456.21, according to Benzinga Pro data.
Cues From Previous Session:
U.S. stocks moved about in a lackluster manner for the bulk of Tuesday’s session but managed to close the day higher. After the Labor Department’s JOLTS survey, showing job openings slumping to their lowest level since 2021 jolted the market early on, the indices stayed mostly below the unchanged. Stocks experienced volatility in the late session but came back up to end firmer.
Small-cap stocks ended with notable losses amid the meme stock volatility.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.17% | 16,857.05 |
| S&P 500 Index | +0.15% | 5,291.34 |
| Dow Industrials | +0.36% | 38,711.29 |
| Russell 2000 | -1.25% | 2,033.94 |
Cues From Previous Session:
Fund Strat’s Tom Lee expects the S&P 500 Index to gain 4% to 5,500 in June, premised on softening inflation, and softening but not weakening labor market. In an interview with CNBC, he said the sell-off in April hasn’t been really recovered. Also, there is $6 trillion in cash waiting on the sidelines that could be deployed by traders, he added.
Fund manager Louis Navellier said in a note to clients that June is typically a very positive month for small and mid-capitalization stocks that are added to Russell indices. This potentially could help broaden the market rally.
He noted that Russell typically publishes their proposed changes on the first Friday in June and then it refines their proposed index changes for two additional weeks. “As Russell adds some stocks to their Russell 1000 and 2000 indices, those stocks typically "pop" on institutional buying pressure,” he added.
Upcoming Economic Data:
- ADP is scheduled to release its private payrolls report at 8:15 a.m. EDT. Economists, on average, expect private payroll gains of 175,000 in May, down from 192,000 in April.
- The final S&P Global U.S. services sector purchasing managers’ index, due at 9:45 a.m. EDT, is expected to show a reading of 54.8 for May, up from 51.3 in April.
- The Institute for Supply Management’s non-manufacturing index for May will be released at 10 a.m. EDT. The PMI may have increased from 49.4 in April to 50.7 in May.
- The Energy Information Administration is scheduled to release its customary weekly petroleum status report at 10:30 a.m. EDT.
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Stocks In Focus:
- Hewlett Packard Enterprise Company (NYSE:HPE) climbed over 14% in premarket trading following the company’s quarterly results announcement, and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) rose over 8%.
- Stitch Fix, Inc. (NASDAQ:SFIX) soared more than 17%, also on earnings.
- Campbell Soup Company (NYSE:CPB), Dollar Tree, Inc. (NASDAQ:DLTR), Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI), Hibbett, Inc. (NASDAQ:HIBB) and United Natural Foods, Inc. (NYSE:UNFI) are among the notable companies reporting their quarterly results before the market open.
- Those reporting after the close include ChargePoint Holdings, Inc. (NYSE:CHPT), Lululemon Athletica Inc. (NASDAQ:LULU), Victoria’s Secret & Co. (NYSE:VSCO), Five Below, Inc. (NASDAQ:FIVE), Semtech Corporation (NASDAQ:SMTC) and Smartsheet Inc. (NYSE:SMAR).
Commodities, Bonds And Global Equity Markets:
Crude oil and gold futures rose modestly and the 10-year U.S. Treasury note yield edged up to 4.342%. Bitcoin (CRYPTO: BTC) climbed over 2% over the past 24 hours and was closing in on the $71K level.
While Asian stocks closed mixed, the major European markets firmed up in early trading. The Indian market rebounded after Tuesday’s sell-off amid the 2024 general election results, and the Japanese, Hong Kong, and Chinese markets settled lower.
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