Monday, June 5, 2023

Stock futures flat Monday after Dow notches best month since January

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Traders work on the floor of the New York Stock Exchange. 


U.S. stock futures hovered around the flatline Monday after the major averages logged gains for April, and the Dow Jones Industrial Average notched its best month since January.

Futures tied to the Dow climbed 19 points, while S&P 500 and Nasdaq-100 futures were flat.

It follows news that JPMorgan Chase has acquired all of troubled lender First Republic’s deposits, including uninsured deposits, and a “substantial majority of assets,” according to a release. JPMorgan’s shares rose 2.86% in premarket trading on the news.

First Republic reported last week that deposits tumbled more than 40% in the first quarter, triggering further declines in the already struggling stock. Shares have cratered 97% since the start of the year.

Stocks are coming off a winning week and month. On Friday, the blue-chip index added 272 points, or 0.8%, while the S&P 500 rose 0.83%. The Nasdaq Composite advanced 0.69% as Big Tech earnings took center stage.

For the month, the Dow gained 2.5% to notch its best monthly stretch since January, while the benchmark index gained 1.5%. The tech-heavy index posted marginal gains.

Earnings reports from major tech companies dominated much of last week’s market debate, fueling the narrative that earnings are faring better-than-feared, despite many widespread macroeconomic concerns.

So far, a little over half of S&P 500 companies have reported earnings, with more than 79% and about 72% surpassing earnings and sales expectations, respectively. First-quarter earnings are currently on track to fall 3.7% for the period, a smaller drop than the 6.7% decline projected on March 31, according to FactSet.

“There was definitely a very positive surprise on the big tech earnings,” said Jan Szilagyi, CEO of Toggle AI. “There was a certain trepidation going into the earnings season,” as expectations called for relative weakness.

Reports from many of these technology giants helped to lift some market confidence, he added.

In other news, investors anxiously await the latest rate hike decision from the Federal Reserve, due out Wednesday at the conclusion of the central bank’s policy meeting. As of Sunday evening, about 79% of traders anticipate a 25 basis point rate hike, according to CME Group’s FedWatch tool. Wall Street will closely monitor remarks from Fed Chair Jerome Powell, offering clues into the central bank’s forward policy path.

Monday kicks off another busy week for earnings, with results from Norwegian Cruise Line and MGM Resorts. Reports from Pfizer, Starbucks, Advanced Micro Devices and CVS Health are due out later in the week.

On the economic front, Wall Street awaits ISM manufacturing data, construction spending and S&P Global manufacturing PMI on Monday. April’s nonfarm payrolls report is on deck Friday.

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