S&P 500 futures were little changed Sunday evening as investors awaited a batch of key earnings reports and a major policy decision from the Federal Reserve.
Futures tied to the broad market index ticked higher by 0.02%. Dow Jones Industrial Average futures were lower by 14 points. Nasdaq 100 futures rose 0.2%.
On Friday the blue-chip Dow eked out a 2.51-point gain, finishing higher for the 10th day in a row and marking its longest rally since 2017. The S&P 500 finished the week up by 0.7% at 4,536.34, while the Nasdaq Composite fell 0.6% in the same period to 14,032.81.
“Investor sentiment appears to be turning slightly bearish, so it will not be surprising for us to see the market, trending flat or lower as investors consider selling some of their investments and pocketing some of the nice gains they have achieved this year,” said Noah Hamman, CEO of AdvisorShares.
Fundstrat’s Tom Lee agreed that profit-taking will be “part of the investor mindset,” particularly for those who enjoying “stupendous” year-to-date returns from tech and FAANG stocks.
“That doesn’t mean that when they take profits, they have to necessarily exit the market,” he told CNBC’s Closing Bell: Overtime on Friday. “If the Fed surprises us in a way because it’s more of a dovish pause, I think investors are going to look for ways to find stocks that rise on easing financial conditions,” he said. “They may not come back to the FAANG. They might stick with tech, but they might broaden out to industrials and financials. So yes, profit-taking, but it doesn’t mean the market has to go down.”
Investors anticipate the Fed will increase rates by a quarter percentage point at the conclusion of its meeting on Wednesday and will be listening to comments by Chair Jerome Powell to get a sense of the central bank’s position on what happens next as it tries to navigate a soft landing for the economy.
They’re also watching for the personal consumption expenditures index, the Fed’s preferred inflation gauge, which is due at the end of the week.
The week ahead is also set to be the busiest one of earnings season, with Thursday being the most intense day. About 40% of the Dow and 30% of the S&P 500 will give their financial updates during the week, including Alphabet, Microsoft and Meta. Several big pharma companies are getting ready to report and it’s a big week for industrial companies and big oil as well.
—CNBC’s Robert Hum and Sarah Min contributed reporting.