Stock futures fall to start holiday-shortened trading week; Disney jumps at CEO change
Stock futures fell on Monday ahead of another round of retail earnings to kick off a shortened Thanksgiving holiday week.
Futures tied to the Dow Jones Industrial Average fell 79 points, or 0.23%. S&P 500 and Nasdaq 100 futures fell 0.55% and 0.79%, respectively.
However, Disney bucked the negative trend, after which it rose by more than 8%. the media giant has announced that Bob Iger will return as CEO, effective immediately.
Investors were reflecting on the strength of the recent bear market rally, which began earlier in the month with October’s consumer price index reading and gained some traction with last week’s wholesale price reading. Traders were stuck last week on messages from Federal Reserve officials, who were less impressed with the numbers and reassessed their optimism about the possibility of a slowdown in inflation.
Yardeni Research’s Ed Yardeni said he thinks the Oct. 12 low is the lowest and the S&P 500 could rise to near 4,300 by the end of the year, he told CNBC on Friday night’s “Closing Bell: Overtime” . The reference index currently stands at 3,965.34.
“What makes a big difference in the market is the resilience of the economy, it’s been spectacular,” he said. “Everybody’s been debating whether we’re going to have a soft landing or a hard landing — meanwhile, there’s no landing at all. The consumer didn’t get the memo about the recession and continues to spend.”
Retail sales rose in October, but at the corporate level, Target reported a slowdown in demand and Amazon announced it would lay off 10,000 employees — although Home Depot and Walmart reported strong results.
“Despite what holiday spending might suggest, retail stocks tend to be in the top three in November, but in the bottom three in December, and somewhere in the middle of the pack in January,” Liz Young, chief investment strategist at SoFi, said in notes this weekend.
“Seasonality has its place in market analysis and has some predictive power. But the power of the economic cycle is stronger, regardless of the time of year,” she added. “With 375 basis points of Fed rate hikes so far, an inverted yield curve, spikes in inflation and commodity prices still part of the narrative, we can only conclude that we are late in the economic cycle.”
This week, short of the Thanksgiving holiday, investors will be busy with another batch of retail earnings. Best Buy, Nordstrom, Dick’s Sporting Goods and Dollar Tree are among the companies on deck.
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