US Stocks Look To Snap String Of Weekly Losses As Futures Signal Positive Start Ahead Of Service Sector Data, Fed Speeches

U.S. stocks have returned to their cautious ways after their resilience performance on Thursday. The major index futures point to a modestly higher opening on Friday.

Cues From Thursday’s Trading:

The major averages advanced on Thursday, as traders digested mixed corporate tidings and slightly dovish interest rate commentary by Atlanta Fed President Raphael Bostic. 

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The 30-stock Dow Industrials hovered above the unchanged line throughout the session, with the buying interest picking up in the afternoon session. Salesforce Inc.’s (NYSE: CRM) 11%+ rally and strength in some industrial and consumer staple stocks as well as chipmaker Intel Corp (NASDAQ: INTC) lent support to the index. The S&P 500 and Nasdaq Composite indices, which languished in the red, recovered in the afternoon to close moderately higher.

Most sectors advanced, led by utility stocks, while consumer discretionary and financial stocks came under selling pressure.

Analyst Color:

A spring rally could be in offing, said Carson Group chief market strategist Ryan Detrick. He noted that in pre-election years, the market typically bottoms in late February before embarking on a spring rally.

During a pre-election year, the S&P 500 bottoms in late February before a spring rally. pic.twitter.com/BAY2TxdgaH

— Ryan Detrick, CMT (@RyanDetrick) March 2, 2023

Detrick also shared another chart that showed the market consolidating until April in years when the S&P 500 gained more than 5% in January. The average return for the year has been 22.9%, he added.

Is it normal for stocks to consolidate after a big start to the year?

It appears to be. Here's the avg year when the S&P 500 gained more than 5% in January.

We are in the heart of a long consolidation historically.

The good news is the avg return for the full year was 22.9%. pic.twitter.com/Mlhnxk96Ux

— Ryan Detrick, CMT (@RyanDetrick) March 2, 2023

Delving into the rate trajectory, Daniel Berkowitz, investment director at Prudent Management Associates said despite continued conflicting signals, the Fed will likely move toward its ultimate terminal rate in 25 basis point increments at the next few policy meetings.

“With that said, it’s hard to imagine the Committee isn’t pleased with February’s surge in yields across the curve, with the bond market doing some heavy lifting for them.”

Futures Today

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE: SPY) rose 0.30%, to $399.02, and the Invesco QQQ Trust (NASDAQ: QQQ) gained 0.37%, to $294.71, according to Benzinga Pro data.

Upcoming Economic Data:

S&P Global’s service sector survey results for February are due at 9:45 a.m. EST. Economists, on average, expect a reading of 50.5 for the headline index, suggesting the sector moved into expansion territory. In January, the index was at 46.8.

The Institute for Supply Management’s non-manufacturing purchasing managers’ index, scheduled to be released at 10 a.m. EST, is expected to show a slight slowdown in expansion. The index is expected to edge down from 55.2 in January to 54.5 in February.

Among the Fed speakers scheduled to speak during the day are:

• Dallas Fed President Lorie Logan at 11 a.m. EST
• Atlanta Fed President Bostic at 11:45 a.m. EST
• Fed Governor Michelle Bowman at 3 p.m. EST
• Richmond Fed President Thomas Barkin at 4:45 p.m. EST

Stocks In Focus:

• C3.ai Inc. (NYSE: AI) climbed over 16% in premarket trading in reaction to its quarterly results.
• Marvell Technology Inc. (NASDAQ: MRVL), Zcaler Inc. (NASDAQ: ZS), Costco Wholesale Corp. (NASDAQ: COST), and ChargePoint Holdings Inc. (NYSE: CHPT) were pulling back following the release of their quarterly results.
• Exelixis Inc. (NASDAQ: EXEL) fell after the company said it flunked a late-stage kidney cancer study evaluating a combination treatment.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures were retreating on Friday after three straight sessions of gains. A barrel of crude oil traded down 0.45% at $77.81. The yield on the benchmark 10-year U.S. Treasury, despite easing a bit, held above 4%.p>

Most Asian markets advanced on Friday, encouraged by the resilience shown by their Wall Street counterparts. The Indonesian, Malaysian, New Zealand and Singaporean markets, however, bucked the uptrend.

The major European markets advanced strongly in late-morning trading.

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