Stock futures decreased on Tuesday morning.
Futures tied to Dow Jones industrial average decreased 11 points which is 0.03%. S&P 500 futures decreased 0.08%. Nasdaq 100 futures decreased 0.2%.
In regular trading Dow increased by 327 points which is 0.98%, and the S&P 500 increased 0.37%. Both posted a consecutive gain on the 4th day. Nasdaq composite decreased 0.27%.
Energy stocks surged after OPEC+ announced a significant reduction in oil output, resulting in a surge in oil prices. The Energy Select Sector SPDR fund (XLE) rose over 4%, highlighting the bullish response of the markets.
However, the energy sector remains volatile, and geopolitical factors can change rapidly.
While investors are optimistic in the short term, there’s no guarantee that this sentiment will continue in the coming weeks and months.
“Until then, as the countries dominating OPEC+ prepare for the future by spending trillions of dollars rebuilding infrastructure and refocusing away from crude oil as their primary source of income, managing the price of crude will be used more directly and aggressively than was anticipated,” she added.
As oil prices continue to rise, analysts are warning of potential inflation and recession fears. However, Mona Mahajan, senior investment strategist at Edward Jones, believes that any volatility in the market is more likely to result in a “normal” correction of 5% to 15%, rather than a second recession after the severe bear market experienced in 2022.
Mahajan identifies three potential headwinds contributing to a period of consolidation and volatility in the market: earnings, market expectations of Federal Reserve policy, and a slowdown in lending due to banking crises.
Investors will also be closely watching the upcoming release of the monthly Job Openings and Labor Turnover Survey for further insight.
Despite Mahajan’s optimistic outlook, Evercore ISI’s senior managing director Julian Emanuel believes that the effects of the Federal Reserve’s tightening monetary policy will lead to a mild recession in the near future.
Emanuel predicts that the economy will experience further tightening, resulting in a downturn that will bear the brunt of the stock market.
As a result, Evercore has added small-cap stocks to its portfolio as a defensive measure.
Emanuel believes that small-cap stocks are a good investment as they have a larger-than-normal weighting towards defensive sectors such as healthcare and energy.
This provides investors with a put-option protection through high free cash flow in the event of an economic downturn or credit crunch, while the call optionality comes from the upward revisions in earnings estimates across the broad spectrum of stocks.
Despite the warnings of potential volatility and recession, stock futures were relatively unchanged at the start of trading on Monday evening.
The Dow Jones Industrial Average futures were down by 0.09%, while the S&P 500 futures slipped by 0.08% and the Nasdaq 100 futures dipped by 0.14%.
- Published By Team Nation Press News