U.S. Stock Market

Stocks Set To Open Lower As Pullback Continues

Traders Focus On Earnings Season In Absence Of Economic Reports

S&P 500 futures are down by about 0.5% in premarket trading as traders wait for additional upside catalysts which could push stocks to new highs.

No important economic reports are scheduled to be released today so traders will focus on companies’ earnings reports. At this point, the main near-term risk for the market is that traders’ expectations are too high.

While many companies routinely beat analyst estimates during the earnings season, exceeding analyst expectations many not be sufficient enough for further upside, especially in the case of high-growth stocks.

At the same time, there are no clear bearish catalysts for the market right now. The situation with coronavirus in the U.S. has stabilized thanks to the robust mass vaccination program. Recent economic reports indicated that the economy was rebounding at a robust pace while consumer activity was growing thanks to the huge stimulus package. In this light, the market will likely need significant catalysts for any notable sell-off from current levels.

Oil Gains More Ground, Supported By Force Majeure In Libya

WTI oil has recently made an attempt to settle above the $64 level as the oil market was supported by Libya’s decision to declare force majeure on exports from Hariga. Libya also stated that force majeure could be extended to other facilities. The reason for the force majeure is a budget dispute, and it remains to be seen whether this problem will be resolved quickly.

The recent developments in Libya offset worries about the second wave of the virus in India and provided material support to the oil market. It should be noted that stock traders are not as optimistic as oil traders, and oil-related equities failed to gain ground in recent trading sessions despite rising oil prices.

Treasury Yields Continue To Rebound

The yield of 10-year Treasuries has recently made an attempt to settle above the 20 EMA at 1.62% but failed to develop sufficient upside momentum and pulled back towards 1.60%.

However, this attempt signaled that bond traders remained worried about higher inflation in the future. If Treasury yields gain more upside momentum in the upcoming trading sessions, stock traders will start to pay more attention to bond markets which may have a negative impact on tech stocks and the stock market in general.

For a look at all of today’s economic events, check out our economic calendar.