December 10, 2022

Stock futures drop to kick off the holiday-shortened trading week;  Disney jumps on CEO change

Stock futures drop to kick off the holiday-shortened trading week; Disney jumps on CEO change

Stock futures fell on Monday ahead of another batch of retail earnings to kick off a shorter week into the Thanksgiving holiday.

And futures contracts related to the Dow Jones Industrial Average fell 79 points, or 0.23%. S&P 500 and Nasdaq 100 futures fell 0.55% and 0.79%, respectively.

Disney bucked the negative trend, rising more than 8% thereafter The media giant announced that Bob Iger will return as CEO, effective immediately.

Investors have been pondering the strength of the recent rally in the bear market, which kicked off earlier in the month with the October CPI reading and gained some steam with last week’s wholesale price reading. Traders last week paused for messages from Fed officials, who were less impressed with the numbers, and reassessed their optimism about the possibility of a slowdown in inflation.

Ed Yardeni of Yardeni Research said that in his view, the Oct. 12 low was the bottom and that the S&P 500 could climb to near 4,300 by the end of the year, he told CNBC on “The Closing Bell: Overtime” Friday night. The benchmark is currently at 3965.34.

“What makes the big difference in the market is the resilience of the economy, it’s been amazing,” he said. “Everyone was arguing about whether we were going to have a soft landing or a hard landing—and at the same time, no landing at all. The consumer didn’t get the recessionary note and kept spending.”

Retail sales increased in October, but companywide, Target reported slowing demand and Amazon announced it would lay off 10,000 employees — though Home Depot and Walmart reported strong results.

“Despite what holiday spending might suggest, retail stocks tended to be in the top three for November, but in the bottom three for December, and somewhere in the middle of the bunch in January,” Liz Young, chief investment strategist at SoFi, said. he said in a note this weekend.

“Seasonality has a place in market analysis and has some predictability. But the power of the economic cycle is stronger no matter what time of year it is,” she added. “With 375 basis points of Fed rate hikes to date, the inverted yield curve, sharp rises in inflation, and commodity prices still part of the narrative, we can all conclude that we are behind in the economic cycle.”

This week, which is a short week due to the Thanksgiving holiday, investors will be busy with another batch of retail earnings. Best Buy, Nordstrom, Dick’s Sporting Goods, and Dollar Tree are among the companies on deck.