U.S. stock futures are poised to close out a memorable November on a positive note, as traders eagerly await the release of crucial inflation data.
Previous Day's Performance
The Dow Jones Industrial Average (DJIA) rose by 13 points, or 0.04%, reaching 35,430. Meanwhile, the S&P 500 (SPX) experienced a slight decline of 4 points, or 0.09%, settling at 4,551. The Nasdaq Composite (COMP) saw a drop of 23 points, or 0.16%, ending the day at 14,258.
Equity indices received a boost from strong earnings reports from Dow Jones Industrial Average member Salesforce (CRM) and software group Snowflake (SNOW).
Key Catalyst: Personal Consumption Expenditure Price Index
The highlight of the day for stocks is likely to be the release of the personal consumption expenditure price index for October. This index is widely regarded as one of the Federal Reserve's preferred measures of inflation. Investors can expect the report to be published at 8:30 am Eastern time.
Positive Momentum Continues
In recent months, diminishing price pressures have contributed to an impressive 8.5% surge in the S&P 500 in November alone. Bond yields have also tumbled as the market anticipates the Federal Reserve's potential decision to lower borrowing costs by spring 2024.
Consequently, equity investors are optimistic that the PCE report will reinforce this bullish narrative. Economists predict that the core PCE index, excluding volatile items like food and energy, will show a month-on-month increase of 0.2%, matching September's reading. Additionally, they anticipate that the annual rate will decrease from 3.7% to 3.5%, marking the lowest level since July 2021.
"U.S. indices are set to achieve their outstanding performance this year in November. The Federal Reserve's discussions and data indicators have largely supported the notion that the current cycle of interest rate hikes is coming to an end," stated Russ Mould, the investment director at AJ Bell.
U.S. Economic Updates and Market Insights
The upcoming release of the PCE report has the potential to leave a lasting impact on Wall Street this November. Market analyst, Mould, suggests that the report will determine if the month ends with a bang or a whimper.
On Thursday, several other U.S. economic updates are scheduled for release. This includes the weekly initial jobless claims at 8:30 a.m., the Chicago Business Barometer for November at 9:45 a.m., and October pending home sales at 10 a.m.
At 9:15 a.m., New York Fed President John Williams will be delivering a speech on the importance of innovation within central banking.
Notable companies reporting their results on Thursday include Kroger, TD Bank, and Cracker Barrel before the opening bell rings on Wall Street. Following that, Marvell Technology, Ulta Beauty, Dell, and PagerDuty will announce their results after the market closes.
Although stocks are currently trending positively as December approaches, there is a word of caution from BTIG's technical strategist, Jonathan Krinsky. He warns against overconfidence, stating that sentiment is starting to become frothy. While some laggards are expected to catch up, there is also a resurgence in meme stocks.
Krinsky points out that the ISEE call/put ratio closed at its highest level since June, and the CBOE equity put/call ratio closed at its lowest level since July. Both of these trends suggest an increasing demand for upside calls, according to Krinsky.
The market awaits these economic updates and watches closely for any potential shifts in sentiment and trading patterns.