Sentiment on Wall Street has turned more cautious as traders prepare for a series of earnings reports this week amid the market’s record rise. The Nasdaq Composite remained a laggard among the major averages and it remains to be seen whether initial sentiment reverses and tech stocks could end the session on a higher note.

A flurry of earnings due ahead of the market could set the tone for the trading day. Traders may also focus on possible early announcements, the results of a regional manufacturing survey and some speeches from Federal Reserve officials. Energy stocks could lose momentum given the sharp decline in energy prices as demand and supply concerns ease. Bond yields remain stable.

In pre-market trading on Tuesday the SPDR S&P 500 ETF Trust SPY fell 0.06% to $583.99 and the Invesco QQQ ETF QQQ The price fell 0.15% to $496.77, according to Benzinga Pro data.

Notes from the last meeting:

Optimism about tech’s earnings season was high on Wall Street on Monday, as the S&P 500 and Nasdaq Composite indexes opened sharply higher and moved roughly sideways before closing higher. The 30-stock Dow opened lower than Boeing Co. B.A acted as a brake, but the blue chip average recovered its losses, rising in late morning trading and remaining in the green for the rest of the session.

As a result, the Dow and S&P 500 hit new closing and intraday highs, with the former breaking above 43,000 for the first time ever. The Nasdaq Composite is almost seven points away from its all-time high of 18,509.34.

All but one of the S&P 500 sector indexes closed the day higher, with energy stocks posting a small loss. IT and utilities stocks were the biggest gainers of the session, led by Nvidia Corp. NVDA. The artificial intelligence star ended the session at a record high.

Insights from analysts:

According to analysts at Morgan Stanley, cyclical stocks are poised for relative outperformance thanks to recent data that bolsters the economy’s resilience. But positioning in cyclical stocks remains low, said the company’s chief U.S. equity strategist Mike Wilson.

“This creates opportunities in a sector that we upgraded to overweight last week amid recovering capital market activity.
a better environment for credit growth in 2025, an acceleration in repurchases following the renewed Basel Endgame proposal and an attractive relative valuation,” he said.

The focus now shifts to the general election, Wilson said. The three overarching dynamics that continue to be important, according to the strategist, are:

• The economic cycle remains more important than the election outcome.
• On average, volatility increases in September of election years and remains high through October before decreasing in November.
• History suggests a distortion of quality in election years.

WisdomTree Senior Economist and Wharton Professor Emeritus Jeremy Siegel also expressed a preference for high-quality names. “Looking ahead, I see opportunities if the current resilience continues,” the economist said.

“Stocks are not cheap by historical standards, but with the fear indicator elevated and investors still largely hedging their bets, we could see a significant rise as sentiment turns more positive,” he added.

Siegel said quality remains key for investors. Small-caps are catching up some, but the fundamentals of large-cap tech companies continue to drive performance, he said. “As inflation moderates and the Fed’s easing cycle begins, sectors such as financials and industrials could benefit from a more favorable economic environment,” he added.

Banks’ initial reports are solid and could set the tone for broader market gains, the economist said.

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Upcoming economic data

• The New York Federal Reserve is scheduled to release the results of its regional manufacturing survey at 8:30 a.m. EDT. Economists on average expect the index to fall sharply from 11.5 in September to 3 in October.
• President of the San Francisco Fed Mary Daly will speak at 11:30 a.m. EDT.
• The Treasury will auction three- and six-month bonds at 11:30 a.m. EDT.
• Fed Governor Adriana Kugler The public appearance is scheduled for 1:00 p.m. EDT.

Stocks in focus:

• Wolfspeed, Inc. WOLF rose nearly 10% in premarket trading after the company announced up to $750 million in proposed direct financing under the CHIPS and Science Act and an additional $750 million in new financing from a consortium led by Apollo Global.
• Trump Media & Technology Group Corp. DJT rose over 10% as the stock reacted to the improving fortunes of Republican presidential candidate Donald Trump.
• Chip manufacturer Nvidia, Micron Technology, Inc. MU And Advanced Micro Devices, Inc. AMD and AI server manufacturers Super Micro Computers, Inc. SMCI were all trading lower after their recent gains.
• Energy stocks fell more than 4% in response to a fall in oil prices.
• Bank of America Corporation BAC, Charles Schwab Corporation SW, Citigroup Inc. C, Goldman Sachs Group, Inc. G.S, PNC Financial Services Group, Inc. PNC, Johnson & Johnson JNJ, UnitedHealth Group Incorporated UNH And Walgreens Boots Alliance, Inc. WBA are among the companies that publish their quarterly results before the market opens.
• Those reporting after the market close include: JB Hunt Transport Services, Inc. JBHT And United Airlines Holdings, Inc. UAL.

Commodities, Bonds and Global Stock Markets:

Crude oil fell over 4.50% in the early New York session following reports that Israel would not launch an attack on Iran’s crude oil infrastructure, and gold futures were slightly higher. Bitcoin BTC/USD has strengthened over the last 24 hours and traded above the $65.5K mark. The benchmark 10-year Treasury yield weakened slightly to 4.065%.

Markets fell sharply in Asia, Hong Kong and China as a series of recent weak data weighed on sentiment, although traders awaited further stimulus from the government and central bank. Most other major markets rose, guided by the positive performance of Wall Street stocks overnight.

European stocks traded mostly lower in the early hours amid falling oil prices.

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