US Stock Futures Indicate Lower Opening On Monday After Last Week's Steep Fall: Analyst Says It's A 'Buying Opportunity,' But Market May Dip Further If This Happens
U.S. stock futures declined on Monday following Friday’s steep fall. Futures of all four major indices fell in premarket trade.
Friday’s decline followed a strong upmove in yields as the economy added 256,000 jobs in December, much above the economists’ forecast of 165,000 jobs, the strongest since May 2024.
Traders now await the consumer price inflation data this week on Wednesday, which will further clear the case for the Fed to pause the rate cuts.
The 10-year and two-year Treasury notes yielded 4.78% and 4.42%, respectively. The probability of having no change in the interest rates for the upcoming Jan. 31, 2025 decision was at 97.3%, according to CME Group’s FedWatch tool.
| Futures | Change (+/-) |
| Nasdaq 100 | -1.27% |
| S&P 500 | -0.86% |
| Dow Jones | -0.38% |
| Russell 2000 | -1.21% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) was down 0.76% to $576.10 and the Invesco QQQ Trust ETF (NASDAQ:QQQ) dropped 1.16% to $501.35, according to Benzinga Pro data.
Cues From The Last Session
Wall Street suffered significant losses last week, erasing all gains since the election. This was primarily driven by a robust jobs report, which increased concerns about persistent inflation and further interest rate hikes by the Federal Reserve. The week’s trading was also impacted by rising geopolitical tensions and increased inflation expectations.
The session witnessed considerable losses among growth equities, particularly those with high valuations and exposure to interest rate sensitivity. This included semiconductor companies such as Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), as well as technology firms like Palantir Technologies (NASDAQ:PLTR).
The Dow Jones Industrial Average closed 1.63% lower at 41,938.45, down approximately 697 points. The S&P 500 Index fell 1.54% to 5,827.04, while the Nasdaq Composite dipped 1.63% to 19,161.63. Russell 200, on the other hand, fell 2.22% to 2,189.23.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.63% | 19,161.63 |
| S&P 500 | -1.54% | 5,827.04 |
| Dow Jones | -1.63% | 41,938.45 |
| Russell 2000 | -2.22% | 2,189.23 |
Insights From Analysts
On Friday, the U.S. 30-year Treasury yielded 4.950% by the end of the trading session, however, it touched a high of 5.005% intraday. The 10-year Treasury, on the other hand, yielded an intraday high of 4.790% to settle at 4.762% on Friday.
“It is most likely that the pressure on interest rates is being driven by inflation fears from the soon-to-be-announced tariffs that Trump 2.0 will bring.” said Louis Navellier, the chairman and founder of Navellier & Associates. “The market appears to be overreacting,” he added.
Ed Yardeni and Eric Wallerstein in their note called ‘Bond Vigilantes Spoking Stock Jockey’ said, “If Tuesday’s CPI inflation rate for December is higher than expected, causing the 10-year Treasury bond yield to revisit 2023’s high of 5.00%.”
As the stocks struggled after Friday’s reports and bond yields’ reaction, Yardeni and Navellier said that this dip was a buying opportunity.
Navellier said that the market could be additionally reacting to the uncertainty on what the Fed may do. Stocks, however, are taking the higher yields to heart, he added, saying “There’s no reason to panic.” as the pullback on higher rates is likely a “buying opportunity unless earnings disappoint.”
Yardeni also reiterated its forecast of 7,000 points on the S&P 500 by the end of the year. “We still believe that the 10-year Treasury bond yield should trade mostly between 4.25% and 4.75% this year. So we think that the selloffs in the stock and bond markets are buying opportunities.”
Carson Research’s VP and global macro strategist, Sonu Varghese in a blog post said that it's not useful to read too much into market moves, especially short-term ones.
He argues that the interest rates are higher because the market likely thinks stronger job creation and economy, will put more upward pressure on inflation, which means the Federal Reserve will have to pause on rate cuts. “Markets are now expecting just one rate cut in 2025 (with a probability of under 25% for a second one) and don't expect it to happen before June,’ he added.
See Also: How to Trade Futures
Upcoming Economic Data
- On Monday, the data for December’s monthly U.S. federal budget will be released at 2:00 p.m., ET.
- On Tuesday, NFIB optimism index for December will be released at 6:00 a.m., ET.
- December’s headline and core producer price index data will be announced at 8:30 a.m., ET.
- Kansas City Fed President Jeffrey Schmid will be speaking at 10:00 a.m. ET.
- Fed will release its Beige Book at 2:00 p.m., ET.
- New York Fed President Williams will deliver his opening remarks on the policy at 3:05 p.m., ET.
- On Wednesday, the headline and core consumer price index for December and the Empire State manufacturing survey data for January will be announced at 8:30 a.m., ET.
- Richmond Fed President Barkin will speak at 9:00 a.m., ET.
- New York Fed President Williams will speak at 11:00 a.m., ET.
- Chicago Fed President Goolsbee will speak at 12:00 p.m., ET.
- On Thursday, initial jobless claims till Jan. 11 will be released at 8:30 a.m., ET.
- December’s U.S. retail sales, import price index and Philadelphia Fed manufacturing survey will be announced at 8:30 a.m., ET.
- Business inventory data for November and the Home builder confidence index for January will be released at 10:00 a.m., ET.
- On Friday, housing starts and building permits data for December will be released at 8:30 a.m., ET.
- The industrial production and capacity utilization for December will be announced at 9:15 a.m., ET.
Stocks In Focus:
- Comtech Telecommunications Corporation (NASDAQ:CMTL) was up 10.17% in premarket ahead of its earnings before the opening bell. Analysts expect a quarterly loss of 16 cents per share on revenue of $125.53 million.
- WD-40 Company (NASDAQ:WDFC) was up 2.48% after it posted better-than-expected results for its first quarter and reiterated its FY25 guidance on Friday.
- KB Home (NYSE:KBH) was down 0.76% ahead of its earnings, which is slated to be reported after the market closes. Analysts expect quarterly earnings of $2.45 per share on revenue of $1.99 billion.
- Nordstrom Inc (NYSE:JWN) was up 0.12% after the company said that its net sales rose 4.9%, while comparable sales increased 5.8% for the nine-week holiday period ended Jan. 4.
- Rigetti Computing Inc (NASDAQ:RGTI) was down 16.01%, Quantum Computing Inc (NASDAQ:QUBT) declined 7.91%, D-Wave Quantum Inc (NYSE:QBTS) slipped 14.21% and IONQ Inc (NYSE:IONQ) fell 14.51% in premarket after CNBC’s Jim Cramer highlighted the speculative nature of nuclear and quantum computing stocks and advised investors to be cautious and realistic about the potential for short-term gains.
Commodities, Gold And Global Equity Markets:
Crude oil futures were higher in the early New York session by 1.76% to hover around $77.08 per barrel.
The gold spot index was down by 0.36% to $2,705.01 per ounce. The Dollar Index was up 0.34% at the 110.02 level.
Asian markets closed lower on Monday as Hong Kong’s Hang Seng, Japan’s Nikkei 225, India’s S&P BSE Sensex, China’s CSI 300, Australia’s ASX 200, and South Korea’s Kospi index declined. European markets were also trading lower.
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