Wall Street On Edge As Nasdaq Nears Record High, Oil Prices Plummet: Strategist Says There's Opportunity If Resilience Continues

Benzinga · 10/15 10:43

Wall Street mood has become circumspect as traders gear up to receive a slew of earnings reports this week amid the market’s record run. The Nasdaq Composite has been a laggard among the major averages and it remains to be seen if the early sentiment reverses and tech stocks could finish the session with a flourish.

A spate of earnings due ahead of the market may set the tone for the day’s trading. Traders may also focus on any potential preannouncements, the results of a regional manufacturing survey and a couple of speeches by Federal Reserve officials. Energy stocks could lose their verve amid the sharp retreat in energy prices amid waning demand and supply concerns. Bond yields continue to hold firm.

Futures Performance (+/-)
Nasdaq 100 -0.12%
S&P 500 -0.05%
Dow -0.06%
R2K -0.07%

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) edged down 0.06% to $583.99 and the Invesco QQQ ETF (NASDAQ:QQQ) moved down 0.15% to $496.77, according to Benzinga Pro data.

Cues From Last Session:

Optimism concerning tech earnings season abounded on Wall Street on Monday as the S&P 500 and Nasdaq Composite Indices opened solidly higher and moved roughly sideways before closing higher. The 30-stock Dow opened lower as Boeing Co. (NYSE:BA) served as a drag, but the blue-chip average recouped its losses and moved higher in late-morning trading and stayed in the green for the remainder of the session.

As a result, the Dow and S&P 500 set fresh closing and intraday highs, with the former topping 43,000 for the first time ever. The Nasdaq Composite is just under seven points from its all-time high of 18,509.34.

All but one of the S&P 500 sector indices closed higher for the day, with energy stocks notching a marginal loss. IT and utility stocks were the biggest gainers of the session, led by Nvidia Corp. (NASDAQ:NVDA). The artificial intelligence stalwart ended the session at a record high.

Index
Performance (+/)		 Value
Nasdaq Composite +0.87% 18,502.69
S&P 500 Index +0.77% 5,859.85
Dow Industrials +0.47% 43,065.22
Russell 2000 +0.64% 2,248.64

Insights From Analysts:

Cyclical stocks are poised for relative outperformance, thanks to the recent data that reinforces the resilience of the economy, according to Morgan Stanley analysts. But positioning in cyclicals remains light, said the firm’s Chief U.S. Equity Strategist Mike Wilson.

“This creates opportunity in a sector that we upgraded to overweight last week given rebounding capital markets activity,
a better loan growth environment in 2025, an acceleration in buybacks post Basel Endgame re-proposal, and attractive relative valuation,” he said.

The focus now shifts to the general election, Wilson said. The three high-level dynamics which are still important, according to the strategist, are:

  • business cycle remains more important than the election outcome.
  • on average, volatility picks up in September of election years and stays elevated through October before decelerating in November.
  • history is supportive of a quality bias in election years.

WisdomTree Senior Economist and Wharton Professor Emeritus Jeremy Siegel also expressed a preference for quality names. “Looking ahead, I see opportunity if the current resilience continues,” the economist said.

“Stocks are not cheap by historical standards, but with the fear gauge elevated and investors still largely hedging their bets, we could see a sharp move higher if sentiment turns more positive,” he added.

Siegel said quality remains the key for investors. Small caps are catching up a bit but the fundamentals of large-cap tech companies continue to drive performance, he said. “With inflation moderating and the Fed's easing cycle beginning, sectors like financials and industrials could benefit from a more favorable economic backdrop,” he added.

Early reports from banks have been solid and could set the tone for broader market gains, the economist said.

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Upcoming Economic Data

  • The New York Federal Reserve is scheduled to release the results of its regional manufacturing survey at 8:30 a.m. EDT. Economists, on average, expect the index to decline sharply from 11.5 in September to 3 in October.
  • San Francisco Fed President Mary Daly will speak at 11:30 a.m. EDT.
  • The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.
  • Fed Governor Adriana Kugler is scheduled to make a public appearance at 1 p.m. EDT.

Stocks In Focus:

  • Wolfspeed, Inc. (NYSE:WOLF) climbed nearly 10% in premarket trading after the company announced up to $750 million in proposed direct funding under the CHIPS and Science Act and an additional $$750 million of new financing from a consortium led by Apollo Global.
  • Trump Media & Technology Group Corp. (NASDAQ:DJT) climbed over 10% as the stock reacted to Republican presidential nominee Donald Trump’s improving fortunes.
  • Chipmakers Nvidia, Micron Technology, Inc. (NASDAQ:MU) and Advanced Micro Devices, Inc. (NASDAQ:AMD) and AI server maker Super Micro Computer, Inc. (NASDAQ:SMCI) were all trading lower, following their recent gains.
  • Energy stocks tumbled in reaction to the 4%+ pullback in oil prices.
  • Bank of America Corporation (NYSE:BAC), Charles Schwab Corporation (NYSE:SCHW), Citigroup Inc. (NYSE:C), Goldman Sachs Group, Inc. (NYSE:GS), PNC Financial Services Group, Inc. (NYSE:PNC), Johnson & Johnson (NYSE:JNJ), UnitedHealth Group Incorporated (NYSE:UNH) and Walgreens Boots Alliance, Inc. (NASDAQ:WBA) are among the companies reporting their quarterly results ahead of the market opens.
  • Those reporting after the close include J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) and United Airlines Holdings, Inc. (NASDAQ:UAL).

Commodities, Bonds And Global Equity Markets:

Crude oil plunged over 4.50% in the early New York session after reports said Israel won’t launch an attack on Iran’s crude oil infrastructure, and gold futures were modestly higher. Bitcoin (CRYPTO: BTC) firmed up over the past 24 hours and traded above the $65.5K level. The benchmark 10-year old Treasury note yield weakened slightly to 4.065%.

In Asia, Hong Kong and Chinese markets retreated sharply as a string of recent weak data weighed down on sentiment, even as traders looked ahead to further stimulatory measures from the government and the central bank. Most other major markets advanced, taking cues from the positive performance of Wall Street stocks overnight.

European stocks traded mostly lower in early hours amid falling oil prices.

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