S&P 500 Futures is Low After Seven-day Winning Streak, Best in Two Years

U.S. stocks were trading with little change on Wednesday, as they sought direction amid a recent rally that has lifted the S&P 500 by over 6% in the past seven days.

‍

Here's the current status:

‍

• The Dow Jones Industrial Average was down 3 points, which is less than 0.1%, at 34,150.
• The S&P 500 remained nearly unchanged at 4,377.
• The Nasdaq Composite had declined by 19 points, approximately 0.1%, to 13,622.

‍

On the previous day, the Dow and S&P 500 notched their seventh consecutive gains, while the Nasdaq recorded an eighth consecutive day of advances. The winning streaks for the S&P 500 and Nasdaq were the longest since November 2021.

‍

What's influencing the market:

• The S&P 500 index has climbed 6.3% during this winning streak, with significant contributions coming from prominent technology stocks. The Nasdaq Composite, which is tech-heavy, has surged by 8.3% over its eight-day winning run, marking its most extended positive streak in two years.

‍

This rally has been driven by a substantial decline in implied borrowing costs following the Federal Reserve's statement last week. Furthermore, soft job data has heightened expectations of potential interest rate cuts on the horizon, as suggested by Derren Nathan, head of equity research at Hargreaves Lansdown.

‍

Nevertheless, Nathan cautioned that stocks might temporarily pause as investors weigh their optimism for rate cuts against mounting financial stresses in the economy. He noted that it wouldn't be the first time during this current phase of elevated interest rates that the market misjudged the timing of a potential Fed pivot.

‍

Tom Lee, head of research at Fundstrat, reasoned that given the substantial recent gains and the absence of major macroeconomic news this week, a period of consolidation for stocks is understandable. However, he added that due to bearish positioning by both institutional and retail investors, stocks are likely to remain buoyant in the absence of significant macroeconomic developments.

‍

On the economic calendar for Wednesday, there were no high-impact reports, but investors were anticipating the Treasury Department's auction of 10-year notes at 1 p.m. Eastern time. Tom Essaye, founder of Sevens Report Research, noted that this auction had the potential to influence bond markets, and if yields started to creep higher afterward, it could act as a headwind for the equity markets.

‍

Federal Reserve Chair Jerome Powell did not make any comments on monetary policy at the Fed conference on economic forecasting. However, other Fed officials, such as New York Fed President John Williams and Fed Vice Chairs Michael Barr and Phillip Jefferson, were scheduled to deliver speeches throughout the day. Powell's speech scheduled for Thursday is expected to be closely watched.