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US Stock Market Poised For Cautious Trading As Holiday Week Begins

Traders remain hesitant following recent gains, while light trading volume could lead to volatility.
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Photo of stock movement on a smartphone. Despite the Federal Reserve’s indication of future rate hikes, the US stock market closed the week, quarter, and half year with solid gains. AUSTIN DISTEL/UNSPLASH.

The stock market is poised to open the holiday-shortened week with caution, as traders remain hesitant following recent strong gains and key events on Main Street. 

With light trading volume expected due to the upcoming holiday, small market movements could lead to some volatility. 

However, the week ending June 30 saw impressive gains driven by positive economic indicators and resilient consumer confidence. 

Despite the Federal Reserve’s indication of future rate hikes, the market closed the week, quarter, and half year with solid gains. 

Additionally, small-cap stocks caught up with their larger counterparts, alleviating concerns about the breadth of the rally.

The S&P 500 Index is poised for another strong run in the second half of the year, said Carson Group’s Ryan Detrick. Since 1950, there were 10 instances when the index is up between 12% and 17% in the first six months of the year, the analyst noted.

The market has advanced in the second half of the year in all the 10 instances and the average second half in these cases has been 10.9%, Detrick said.

In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.14% to $443.91 and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.29% to $370.50, according to Zenger News Pro data.

The holiday-shortened week has its fair share of market-moving economic data, with the ones related to private sector activity and the job market likely to be key among them. Traders are also likely to sift through the minutes of the June FOMC meeting to glean clues regarding the likely near-term fed rate trajectory.

S&P Global is scheduled to release its final U.S. manufacturing purchase activity index for June at 9:45 a.m. EDT. Economists, on average, expect the index to be left unrevised at the flash reading of 46.3, although down from 48.4 in May.

The Institute for Supply Management is due to release its June manufacturing PMI at 10 a.m. EDT. The consensus estimate calls for the index to come in at 47.2 compared to the May reading of 46.9.

The Commerce Department will release its construction spending report for May at 10 a.m. EDT. Construction spending may have increased 0.5% month-over-month in May, slower than the 1.2% growth in April.

The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.

Tesla, Inc.rose over 6% in premarket trading after the electric vehicle maker reported record deliveries for the second quarter. Digital World Acquisition Corp., the SPAC linked with Donald Trump’s Trump Media & Technology Group-owned Truth Social, gained over 3% amid Twitter’s woes. Twitter owner Elon Musk announced a temporary cap on the number of tweets users can read a day, which created a furor. Truth Social is now made available worldwide, while earlier it was restricted to users in North America.

Crude oil futures rose 0.98% to $71.33 in early European trading on Monday. The commodity rose 2.14% in the week ended June 30.

The yield on the benchmark 10-year Treasury note rose 0.028 percentage points to 3.847%.

Major Asian markets ended Monday’s session notably higher, as traders took stock of the buoyancy on Wall Street and savored some strong domestic data. The results of the Tankan Survey from Japan showed improving business sentiment in the second quarter. Reacting to the strong data, the nation’s main stock market gauge, the Nikkei 225 average closed at a 33-year high.

European stocks showed tentativeness in late-morning trading on Monday, as the markets in the region paused for a breather following their recent rally.

© 2023 Zenger Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by Suparba Sil and Virginia Van Zandt

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