US stock futures are trading mixed today in early futures trading action as investors await the release of multiple relevant economic data points and earnings from top corporations in and outside the United States.
So far this morning, E-mini futures of the Dow Jones Industrial Average (DJIA) are up 0.33% at 34,799 while those of the S&P 500 are trading 0.1% higher at 4,230. Meanwhile, future contracts of the tech-heavy Nasdaq 100 index are down 0.25% at 13,676 as weakness in the growth segment of the market continues.
Last week was also mixed for US stock indexes, with the Nasdaq displaying a 1% drop while the S&P 500 and the Dow Jones both closed at record levels, ending the period 1.2% and 2.7% higher respectively despite a weaker-than-expected jobs report.
The US Labor Department reported last Friday that the country was able to create 266,000 new job positions during the month of April while economists were expecting a total of 1 million new jobs during the period. This major miss highlighted weaknesses in the pace of the economic recovery, which led investors to believe that more stimulus might be needed.
In this regard, US President Joe Biden commented that although “efforts are starting to work”, referring to the previous lifelines extended to the economy including the latest $1.9 trillion stimulus bill, he acknowledged that “the climb is steep, and we have a long way to go”.
Market participants believe that this important lower reading in the number of jobs created during April could prompt the government to issue more stimulus to virus-battered sectors or even via direct payments.
Moreover, others also believe that the Federal Reserve will now postpone discussions about tapering their asset purchase program – a situation that reinforces a mid-term bullish view toward the stock market.
What to expect for this week?
As for this week, investors will be keeping an eye on the release of inflation data on Wednesday along with a report on retail sales from the US Department of Commerce to be released on Friday. Moreover, the government will be auctioning a combined total of $68 billion in 10-year and 30-year Treasury bonds on Wednesday as well.
Meanwhile, many important corporations are reporting quarterly earnings this week including companies that have recently gone public including Palantir (PLTR), Lemonade (LMND), Bumble (BMBL), Coinbase (COIN), Airbnb (ABNB), and DoorDash (DASH).
Finally, e-commerce giant Alibaba (BABA) and Disney (DIS) will be reporting their quarterly results on Friday.
What’s next for US stock futures?
The chart above shows that even though the Nasdaq 100 initially declined from its 14,000 short-term top, the index’s 50-day simple moving average continues to hold after posting a golden cross on 14 April.
The past three times that the Nasdaq has displayed this setup, the index has gone up more than 20% during the next three months that followed. As long as the index trades above that support, chances are that we could see it moving higher from here.
That said, there is weakness in the price action as highlighted by momentum oscillators, with the RSI struggling to remain above 50 while temporarily breaking below that level last week. Meanwhile, the MACD sent a sell signal in the last days of April and that is a warning signal that traders should not ignore.
For now, as long as the price remains above the 50-DMA and possibly above last week’s lows of 13,380, the outlook continues to be bullish on the back of prolonged stimulus and support from both the government and the Federal Reserve.
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