Wall Street looks for signs S&P 500 can hang onto 2,000
New York (Oct 16) Wall Street was in a cautious mood on Friday, as investors waited to see if markets can pick up where they left off, after the major indexes closed at their best levels since August.
Readings on industrial production and consumer sentiment are expected later Friday.
Dow Jones Industrial Average futures YMZ5, -0.15% slipped 33 points to 17,035, while those for the S&P 500 index ESZ5, -0.14% were off 4.25 points to 2,015.75. Futures for the Nasdaq-100 index NQZ5, -0.02% rose 3.25 points, or less than 0.1%, point to 4,408.50.
Markets reclaimed two major technical levels on Thursday, as the S&P 500 SPX, +1.49% closed up 29.62 points at 2,023.85. That was above the psychologically important 2,000 level and its best finish since Aug. 20. Meanwhile, the Dow industrials DJIA, +1.28% were up 217 points to 17,141.75, the best close since Aug. 19.
For the week so far, indexes have made moderate gains across the board, with a near 0.5% gain for the S&P 500 and a 0.3% rise for the Dow industrials. The Nasdaq Composite COMP, +1.82% is 0.8% higher for the week so far, after closing up 87.25 points at 4,870 on Thursday, led by biotech stocks.
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Reasons to doubt the gains: Even as major U.S. markets closed back above those August lows, doubts remained over whether those advances will stick around. Wouter Sturkenboom, investment strategist at London-based Russell Investment, said he remains neutral on U.S. equities.
He prefers European stocks, where Russell—which has $266 billion under management—has an overweight position. Sturkenboom said if the U.S. rally is going to extend beyond a bounceback from August’s oversold technical levels, then markets will have to find direction from earnings, economic data or comments from Federal Reserve officials.
“It’s unlikely we’ll put more money to work in the U.S. and buy into this rally, because we are worried about the earnings outlook for the U.S.,” said Sturkenboom. “This earnings season will be an important market. We have a combination where our outlook for the business cycle is waning, and equity momentum has slipped into negative territory.”
Data to come: Industrial production and capacity utilization for September are due at 9:15 a.m. Eastern Time. Production is expected to slip 0.2%, according to economists polled by MarketWatch. That is compared with a 0.4% drop for August.
At 10 a.m. Eastern, October consumer sentiment will be released, with job openings for August coming at the same time.
Late Thursday, Cleveland Fed President Loretta Mester said the U.S. economy “can handle” an increase in interest rates, despite the risks around its outlook.
Stocks to watch: Ahead of the opening bell, General Electric Co. GE, +1.56% reported profit and revenue that beat forecasts, but shares still slipped a half percent in premarket. Honeywell International Inc. HON, +0.24% HON, +0.24% shares were up slightly after it posted results.
Advanced Micro Devices AMD, +1.03% could be in focus after the chip maker reported worse-than-expected earnings, but said it would set up a new joint venture for manufacturing with a Chinese firm.
Read: Why AMD won’t join chip merger frenzy
Other markets: The Shanghai Composite SHCOMP, +1.60% closed out the week with a 6.5% gain as investors grew confident that Beijing will come up with some more stimulus. The market has now logged its first back-to-back weekly gains since August. European stocks SXXP, +0.52% were up Friday and on course for a weekly gain, though shares of Nestlé SA were under pressure after the consumer goods company cut its outlook.
Gold futures GCZ5, -0.59% got knocked off four-month highs after an advance by the U.S. dollar DXY, +0.25%
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Oil prices CLX5, +0.69% attempted to recover from Thursday’s major selloff, climbing 64 cents to $47 a barrel.
Source: MarketWatch
