Stock Market Today: Stocks rebound ahead of huge week on Wall Street

The S&P 500 is looking to pull itself out of the biggest peak-to-trough drawdown in more than 18 months.

Apr 22, 2024 - 18:30

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Stock Market Today: Stocks rebound ahead of huge week on Wall Street

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U.S. equity futures moved firmly higher Monday as Wall Street looked to snap its longest losing streak in more than eighteen months on the back of fading geopolitical risks heading into one of the busiest earnings weeks of the year.

Stocks closed firmly lower on Friday, extending the S&P 500's run of losses to a sixth consecutive session, the longest since October 2022 and a slump that marks a 5.5% drawdown from the start of the second quarter.

A quiet weekend in the Middle East, however, as well as the passage of a contentious Ukraine aid package has soothed some of the market's geopolitical concerns while Treasury bond yields appear to have matched recent gains amid a repricing of interest rate forecasts from the Federal Reserve.

Benchmark 2-year Treasury note yields, however, are holding at just under 5%, a level that is more than triple the S&P 500 dividend yield and likely to tempt investors with a risk-free return in the face of the recent market pullback.

The S&P 500 is facing its biggest peak-to-trough drawdown since October and its longest single-session losing streak in more than eighteen months.
Michael M. Santiago/Getty Images

That rotation will likely face a series of tests this week with around 160 S&P 500 companies reporting first quarter earnings this week, including market heavyweights Tesla (TSLA) , Alphabet (GOOG) and Microsoft (MSFT) .

LSEG data suggest that collective S&P 500 first-quarter profits will rise 2.9% from a year earlier to a share-weighted $447.9 billion, with that rate improving to 10.7% over the three months ending in June.

Investors will also need to navigate the first estimate of first quarter GDP, due April 25, as well as a March reading of the Fed's preferred inflation gauge, the PCE price index, due the following day.

"With markets — by most technical metrics — oversold and due for a bounce, next week’s tech-earnings reports coupled with a key inflation report could provide the catalysts markets need for a rally," said LPL Financial's chief global strategist, Qunicy Krosby.

"As events in the Middle East appear to have subsided, at the margin at least, traders and investors will be able to focus on the path of inflation with the PCE, especially with more Fed speakers acknowledging that the pace of disinflation has stalled," she added.

Markets remain on edge following last week's slump, however, with the CBOE's VIX index holding at around $18.53 in overnight dealing, a level suggests traders are expecting daily price swings of around 1.15%, or 57 points, for the S&P 500 over the next month.

Related: Got stocks? Don't panic

However, heading into the start of the April 22 trading day on Wall Street, stock futures are looking at a firm start to the week, with contracts tied to the S&P 500 suggesting a 28 point opening bell gain, a move that would take the benchmark back closer to the 5,000-point mark.

Futures tied to the Dow Jones Industrial Average, meanwhile, are priced for a 233 point advance and those linked to the tech-focused Nasdaq are indicating a 100 point gain.

More Wall Street Analysts:

In overseas markets, Europe's Stoxx 600 was marked 0.5% higher in early Frankfurt trading ahead of a busy earnings week, which includes Q1 updates from 173 companies, including some of the region's biggest banks.

Overnight in Asia, the Nikkei 225 was marked 1% higher by the close of trading in Tokyo, while the regionwide MSCI ex-Japan index gained 0.91% into the close of trading.

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