The US index futures market showed little positive changes after the publication of quarterly reports of Walmart and Home Depot, which were better than analysts' forecasts. Dow Jones index futures rose by 76 pips or 0.2%. S&P 500 futures increased by 0.1%. Nasdaq 100 futures were trading without any changes.
Investors are closely watching macroeconomic data today, including the US retail sales for October and the industrial production index. Economists expect the retail sales data to increase by 1.5% after rising by 0.7% in September. The NAHB Housing Market Index will also be released.
The Dow Jones index was down about 13 pips or 0.04% after the trading session yesterday. The index showed the fourth decline in the last five trading days. The S&P500 index closed the trading day unchanged at $4,682. The index was up by 0.3% at one point but then declined. The Nasdaq Composite index also closed the trading session almost unchanged with a slight decline of 0.04%.
Stocks were actively trading as the 10-year Treasury bond yield rose above 1.62%. The yield on the 30-year Treasury bond increased above 2%.
The market stayed near its yearly highs amid fears about inflation, which have been rising lately. Last month the consumer price index showed its biggest annual increase in more than three decades. Inflation is not expected to start falling until 2022, not until the Federal Reserve raises interest rates. However, as several economists have noted, the more persistent drivers of inflation are likely to persist.
Despite all the above, strong US GDP growth should still provide plenty of good investment opportunities for the stock market. With a larger increase in US retail sales, more robust GDP growth may continue at the end of the year.
Yesterday, President Joe Biden signed the bipartisan $1 trillion infrastructure bill into law, but it did not have much impact on the market, as the amount was much more modest than the previously announced $3 trillion.
Let's take a quick look at the premarket:
The market volatility slightly increased after Walmart reported its third-quarter earnings and revenue well above analysts' estimates, with sales jumping by 9.2%. The company also raised its outlook for 2021, saying adjusted earnings per share would be about $6.40, which is higher than its previous expectations of between $6.20 and $6.35. The shares soared by 2% at the premarket.
Home Depot's third-quarter earnings also exceeded forecasts with sales up 9.8%. The stock was up by 1.5% on the premarket. The company reported third-quarter earnings of $3.92 per share, $0.52 per share above estimates.
Tesla CEO Elon Musk sold $930 million worth of stock to meet his tax obligations after his options were exercised. This had no serious effect on the market. Yesterday, Tesla stock fell by 2% after a controversy between company founder Elon Musk and Senator Bernie Sanders, who is a supporter of higher taxes for wealthy Americans. Sanders wrote that more taxes should be taken from wealthy Americans, to which Musk asked Sanders, "Want me to sell more stock, Bernie? Just say the words..." Of course, such remarks did not go unnoticed by the market, especially after the big sell-off in Tesla last week.
Autoliv was among the market leaders. The company's stock gained 4.4% at the premarket after announcing a new $1.5 billion share buyback program. The maker of automotive safety systems also adjusted its growth target, expecting growth of 4% to 6% a year in 2024.
In contrast, Advance Auto Parts shares were down by 2% at the premarket even after the company reported earnings of $3.21 per share for the previous quarter, above the $2.87 per share forecast. The auto parts retailer exceeded forecasts for revenue and other key metrics. However, the company noted that high inflation would likely have a negative impact on the companies' future forecasts.
As for the technical analysis of the S&P500 index
S&P500 is gradually returning to its all-time high of $4,718 as investors look for a more positive end to the year and for the Federal Reserve to maintain its accommodative policy. Support is located at $4,660. If the price breaks through this level, it may increase pressure on the trading instrument and lead to a larger drop of the index to $4,609 and $4,551. A breakout of $4,718 is likely to pave the way to $4,750 and $4,775.