A late rally in the stock market on Monday led to mixed results in premarket trading on Tuesday, as investors await several key economic reports and central bank decisions.
The Dow Jones Industrial Average futures dipped by 100 points, while the S&P 500 and Nasdaq 100 futures also traded lower as of Tuesday morning.
The downward moves come after a market surge on Monday, where the S&P 500 and Dow both reached record highs. Despite the positive mood, some analysts are cautious about the stock market’s long-term prospects.
Marko Kolanovic of JPMorgan, the bank’s co-head of global research, warned that the upside for risky assets might be limited due to factors such as interest rate shock and fading consumer strength.
On the central banking front, the Bank of Japan (BOJ) maintained its super easy monetary policy at its final policy meeting for the year on Tuesday. The BOJ is expected to hold interest rates at -0.1% and stick to its yield curve policy, which references the 1% upper bound for 10-year Japanese government bonds.
The Japanese yen reversed gains following the announcement, trading at about 143.5 against the greenback in midday trade.
Meanwhile, housing starts in the U.S. came in stronger than expected, with starts rising to a seasonally adjusted annual rate of 1.56 million units in November, well above the 1.36 million anticipated by economists. Building permits came in at 1.46 million, slightly lower than the consensus estimate of 1.48 million.
In other news, Semiconductor stocks are seeing recovery after a year of uncertainty and KeyBanc Capital Markets expects a “soft landing” for the industry. John Vinh of KeyBanc said that progress in inventory destocking is putting the industry on pace to normalize in the first half of 2024.
Investors are the most optimistic they’ve been in more than a year in anticipation of a soft landing next year, according to Bank of America. The firm’s Michael Hartnett revealed in a recent survey that over half of fund managers expect weaker global growth ahead, but more than seven out of 10 investors anticipate a “goldilocks” scenario.
As for stock movements, the SPDR S&P 500 ETF Trust (SPY) reported a net inflow of $20.8 billion on Monday, the largest in recent memory. Meanwhile, Cathie Wood of Ark Invest scooped up shares of Pinterest on Monday despite a 55% rally in Pinterest’s shares this year.
While the global macroeconomic outlook presents risk for investors, analysts remain keenly tuned in to market movements and future policy decisions.