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Dow futures hover near record ahead of pivotal week of tech earnings

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U.S. stock futures on Monday pointed to a cautious start, as investors awaited a barrage of earnings and pivotal economic news with major indexes at or near record levels.

What’s happening

  • Dow Jones Industrial Average futures
    YM00,
    -0.03%

    fell 21 points, or 0.1%, to 38,237.

  • S&P 500 futures
    ES00,
    +0.03%

    were off 1 point at 4,915.25.

  • Nasdaq-100 futures
    NQ00,
    +0.15%

    were up 16 points, or 0.1%, at 17,543.

Stocks ended Friday with a third straight weekly gain. The Dow
DJIA
logged its fifth record close since the end of 2023, while the S&P 500
SPX
finished a 10th of a percentage point below its all-time closing high and the Nasdaq Composite
COMP
ended less than 4% from its record close set on Nov. 19, 2021.

What’s driving markets

“This could be the greatest week for ‘event risk’ in many years. I suppose we could also call it ‘event reward,’ who knows?” quipped technical analyst Mark Arbeter, president of Arbeter Investments, in a client note.

Indeed, it’s a huge week for earnings with results due out of Microsoft
MSFT,
-0.23%
,
Apple
AAPL,
-0.90%
,
Alphabet
GOOGL,
+0.21%
,
Amazon
AMZN,
+0.87%

and Meta Platforms
META,
+0.24%
,
as investors also prepare for a Fed interest-rate decision, jobs market data and the Treasury’s quarterly refunding.

See: Stock-market rally faces Fed, tech earnings and jobs data in make-or-break week

“For a data dependent Fed, and one that still needs to reclaim its inflation fighting credibility, the likely response will be to continue to guide away from a March rate cut, but also remind us the Fed will be willing to act if need be — i.e., retain optionality,” said Richard de Chazal, a macro analyst at William Blair. “We should also expect to get a little more flesh on the bone with regard to the timing of the [quantitative tightening] tapering program.”

De Chazal added that earnings so far haven’t been too impressive — earnings for the 124 S&P 500 companies that have reported so far are up 2.3% vs. expectations of a 1.2% increase, which is below the average gap of 4.4 percentage points.

Don’t miss: The busiest and most crucial week for fourth-quarter earnings is here. These 5 companies will do the heavy lifting.

There’s also geopolitical worries after an attack killed three U.S. soldiers and injured 34 more in Jordan. Oil futures
CL00,
-0.64%

were trading under $78 a barrel, while gold
GC00,
+0.92%

rose and the yield on the 10-year Treasury
BX:TMUBMUSD10Y
fell. Yields move in the opposite direction to prices.

Meanwhile, with the S&P 500, S&P 100
OEX
and Nasdaq-100 tracking QQQs
QQQ
at all-time highs, there’s no “chart resistance or overhead supply above current prices,” Arbeter wrote.

“In other words, everyone invested in these indices is sitting with a profit,” Arbeter wrote. “Most of the great stock market gains come after indexes and individual stocks break out to ATH’s (all-time highs). These mega cap indices have created what we call a platform from which to march higher.”

At the same time, it would be remiss not to express worries about overbought technical conditions, divergent momentum, overbought breadth and some sentiment indicators “that are certainly stretched,” he said.

Companies in focus

  • Amazon.com Inc.
    AMZN,
    +0.87%

    and Roomba parent iRobot Corp.
    IRBT,
    -3.36%

    said Monday they are scrapping their planned acquisition agreement because they believe there’s no path to regulatory approval in the European Union. Shares of iRobot were down more than 17% in premarket trade.

  • Shares of REV Group Inc.
    REVG,
    +0.39%

    soared nearly 10% Monday, near a three-year high, after the maker of electric- and hydrogen-powered commercial vehicles said it would pay out a special dividend with the cash generated by strategic actions, including winding down its transit bus manufacturing business.

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