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We'll start this week with a refrain that has been similar in prior weeks. The S&P 500 and Nasdaq Composite are at record highs entering the week. That is the case thanks to a heady performance by the mega-cap stocks last week.
At the moment, it is an open canvass. There is no telling, based on the equity futures trade, what areas might emerge to outperform this week or underperform this week.
The S&P 500 futures are down two points and are trading in-line with fair value, the Nasdaq 100 futures are down 31 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are up 48 points and are trading fractionally above fair value.
This can potentially be a big week for the stock market in either direction, although it is fair to say at this juncture that market participants are likely predisposed to it being another positive week. Seasonality and momentum have been on their side, so it stands to reason that they would think that the trend will remain their friend.
Whether it does is apt to have a lot to do with this week's key events, which include earnings reports from Oracle (ORCL) and Costco (COST), the November Consumer Price Index, the November Producer Price Index, and the ECB policy decision.
These will be news catalysts that have broad, market-moving potential, but for now the market isn't moving much.
There is a festering sense of valuation concerns to go along with worries about complacency that seem to be keeping the stock market in check. Accordingly, the market feels more reactive than pro-active when it comes to price action. Said another way: market participants are going to let the early price action be their guide before forcing any of their will on the price action.
They will do so as they consider a news flow that includes the following:
- Omnicom (OMC) acquiring Interpublic Group (IPG) in a stock-swap deal
- Apollo Global Management (APO) and Workday (WDAY) being added to the S&P 500 prior to the open on December 23
- China opening an anti-monopoly investigation of NVIDIA (NVDA), according to Bloomberg
- The Assad regime being overthrown in Syria; and Russia providing asylum for Assad
- South Korean President Yeol surviving an impeachment vote
- Chinese leaders changing their stance on monetary policy to "moderately loose" from "prudent;" and
- President-elect Trump stating in a "Meet the Press" interview that he won't replace Fed Chair Powell and will pursue his aim to extend the tax cuts, levy tariffs, deport illegal immigrants, and try to end birthright citizenship
