U.S. stocks are poised to continue their upward momentum from last week, with a cautious sense of optimism prevailing. Major index futures showed slight gains in early trading, following strong performances in the previous week.
Given the recent gains, traders may opt to take profits, especially with the upcoming Fed meeting. Analysts are hopeful that the market’s upward trend will strengthen if the central bank delivers a dovish message. With no significant cues from Main Street, focus is expected to be primarily on earnings.
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (SPY) rose 0.20% to $509.27, while the Invesco QQQ ETF (QQQ) climbed 0.29% to $432.27, according to Benzinga Pro data.
Last week, U.S. stocks rebounded strongly, driven by robust corporate profit growth. The Nasdaq Composite and the S&P 500 Index recovered after a series of losses, with bargain hunting boosting the major averages. Despite inflation concerns mid-week, strong earnings results led to a comeback in the final session.
The Nasdaq Composite and the S&P 500 Index ended the week with significant gains, reaching their highest closing levels since April 12.
According to Carson Group’s Ryan Detrick, the market may enter a seasonally strong period in election years, with historically strong months in June, July, and August.
Tom Lee of FundStrat recommended buying the dip, contingent on the Fed maintaining a dovish stance at the May monetary policy meeting.
Upcoming economic data includes the Federal Open Market Committee’s rate decision, labor market reports, consumer confidence readings, and manufacturing activity data. Traders will also hear from Fed officials after the blackout period expires.
In the commodities, bonds, and global equity markets, crude oil futures dipped slightly, while gold futures traded higher. The 10-year note yield eased ahead of the Fed meeting. Bitcoin fell over 1.50%, trading around $62.5K level.
Asian markets saw strong gains, led by the Chinese market, following positive sentiment from Wall Street. European stocks started cautiously, with the Euro STOXX 50 Index down 0.17% in early trading.
Overall, market optimism remains high despite inflation concerns and slowing economic growth, fueled by strong quarterly earnings reports.