Traders have returned back to their cautious ways following the week’s strong run-up amid hopes of a soft landing and earnings optimism. The index futures are pointing to a modestly lower opening on Friday.
Cues From Thursday’s Trading:
On Thursday, the major averages closed with noteworthy gains as better-than-feared earnings news flow lent support. The indices opened higher and saw some volatility in early trading as traders reacted to stronger-than-expected fourth-quarter GDP data.
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After bottoming in late morning trading, stocks moved steadily higher through the remainder of the session.
The week’s rally has pushed the S&P 500 Index to nearly a two-month high and the tech-heavy Nasdaq Composite to its highest level since Sept. 19.
Thursday’s rally was supported by strong gains for energy, consumer discretionary, communication services, technology and real estate stocks.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | +1.76% | 11,512.41 | |
| S&P 500 | +1.10% | 4,060.43 | |
| Dow Industrials | +0.61% | 33,949.41 |
Analyst Color:
The fourth-quarter GDP data provides scope for the Fed to raise rates further without crushing the economy, said Daniel Berkowitz, senior investment officer at Prudent Management Associates. But he warned that monetary policy tends to transmit through the economy with a lag.
Upcoming earnings reports from large tech companies until early February is more important than the likely 25 basis-point hike in early February, he said.
“A set of much weaker-than-expected reports from these firms could dent the market’s strong start to 2023,” said Berkowitz.
“We maintain a positive outlook on equities for the intermediate term and believe, for the moment, economic data is pointing to a “soft-ish” landing for the economy this year, which is a net positive in our view.”
Futures Today:
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | -0.50% | |
…….
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