Stock futures barely changed Monday night after the Nasdaq Composite posted a second day of gains, helped by Tesla and other tech stocks.
Futures related to the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 hovered just below the flatline.
In regular trading, the Nasdaq Composite posted a 0.6% gain, helped by a 6% rally in Tesla. Meanwhile, the Dow Jones erased a 304 point gain and ended down nearly 113 points, while the S&P fell 0.1%.
Stocks rose to start the day, after a winning week for major averages. Investors were reassured by the possibility that the Federal Reserve could slow the economy and lower inflation without tipping the economy into a recession, and took a risk stance.
Monday also marked the end of the first five trading days of 2023, in which the S&P 500 gained 1.1%. According to a classic stock market indicator, this kind of early strength could bode well for the rest of the year.
Fundstrat’s Tom Lee called it a “strong omen” and said the market was poised for a 20% rally this year.
The Fed wants financial conditions to “stay tight,” Lee said on CNBC’s “Closing Bell: Overtime.” “Dollar, stocks, bonds – it’s all going to sort of calm down, so they’re probably a little worried and they want to be sure that inflation is actually dead. But one of the changes, especially since October, is that inflation is down.”
Depending on how CPI data moves on Thursday, the bond market could push the Fed to make February the last rate hike before cuts, Lee added.
On Tuesday, investors will get wholesale trade data and follow a speech by Fed Chairman Jerome Powell at a conference in Sweden.
No earnings report is scheduled for Tuesday, but major banks will release their updates later in the week.