The stock market experienced a sharp sell-off on December 20th, but US stock futures are pointing towards a rebound on December 21st. This comes after the worst daily sell-off in three months, with nerves settling and the prospect of interest-rate cuts boosting market spirits. Let’s take a closer look at the factors contributing to this rebound and what investors should keep an eye on.
US Stock Futures Rebound from Worst Daily Sell-Off in Months
The previous day saw a significant sell-off in the US stock market, with the S&P 500 experiencing its biggest single-day loss since October. However, on December 21st, US stock futures are showing signs of recovery. S&P 500 futures have popped roughly 0.5%, indicating a comeback from the previous day’s losses. Additionally, futures on the Dow Jones Industrial Average rose 0.4%, while those on the tech-heavy Nasdaq 100 gained 0.6%. This rebound is a positive sign for investors who were concerned about the recent market downturn.
Factors Contributing to the Sell-Off and Rebound
Expectations of Interest-Rate Cuts
One of the primary factors driving the recent market volatility is the expectation of interest-rate cuts by the Federal Reserve. Investors have been anticipating a pivot towards rate cuts, potentially as soon as March. This outlook has fueled a record-breaking rally in stock prices. Despite some pushback from central bank officials, the market has remained convinced of the possibility of rate cuts. The rebound in US stock futures indicates that this conviction is still strong.
Bellwether FedEx’s Downbeat Revenue Forecast
Another factor that contributed to the sell-off on December 20th was the downbeat revenue forecast from bellwether company FedEx. The company’s forecast raised concerns about the overall health of the US economy. This news, combined with profit-taking at the end of the year and zero-day options trading, added to the selling pressure in the market. However, it’s important to note that there was no clear culprit for the sharp slide, indicating that multiple factors were at play.
Key Economic Data and Earnings Reports
Update on Third-Quarter GDP
Investors will be closely watching the update on third-quarter GDP, as it could provide insights into whether the Federal Reserve is successfully managing a “soft landing” for the US economy. A reading on weekly jobless claims is also due, which can provide further indications of the health of the job market. These economic data releases will play a role in shaping market sentiment and could impact future market trends.
Micron Technology’s Positive Revenue Forecast
In individual stock news, Micron Technology’s shares rose 6% in premarket trading after the memory chipmaker’s second-quarter revenue forecast exceeded Wall Street’s expectations. This positive outlook signals a potential revival for the memory chip sector, which has been facing significant price slumps. Investors will be monitoring Micron Technology’s performance closely, as it can provide insights into the broader semiconductor industry.
Earnings Reports to Watch
Several companies are scheduled to release their earnings reports, which can have a significant impact on their respective stock prices. Here are a few notable companies to watch:
- CarMax (KMX): Keep an eye on CarMax’s earnings report, as it can provide insights into the health of the automotive industry.
- Carnival (CCL): Carnival’s earnings report will be of interest to investors in the travel and leisure sector.
- Nike (NKE): Nike’s earnings report can provide insights into the performance of the retail and apparel industry.
Conclusion
The US stock market experienced a sharp sell-off on December 20th, but US stock futures are pointing towards a rebound on December 21st. The expectation of interest-rate cuts, concerns about the US economy, and profit-taking were among the factors contributing to the sell-off. However, the rebound in US stock futures indicates that market sentiment remains positive. Investors will be closely watching economic data releases and earnings reports to gauge the health of the US economy and make informed investment decisions.
Remember to stay informed and consult with a financial advisor before making any investment decisions.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice.