Nasdaq Futures Fly On Buffett’s Alphabet Bet, Nvidia Q3 Hopes— Strategist Cites Fatigue Yet Expects Bull Run To Hold

• Tech could lead a strong recovery in the broader market on Monday.
• A strategist said the past week’s market performance is a signal pointing toward the first significant sign of risk aversion in over six months.
• Retail traders hope for an anemic September jobs report, which could raise odds of a December rate cut.

The U.S. index futures point to a higher opening on Monday after the past week’s tech-led weakness. Bargain hunting could come into play as some of the most significant tech stocks that have led the current bull run experienced dents to their valuations amid the tech sell-off.

Billionaire investor Warren Buffett’s addition of Alphabet stock to Berkshire’s portfolio could be seen by traders as a sign of confidence in artificial intelligence (AI). This theme suffered a setback recently due to market skepticism. Additionally, Nvidia’s earnings due on Wednesday could give a lift to the space. 

With the federal shutdown ending, government data releases are expected to resume. The Bureau of Labor Statistics has confirmed that the September jobs data will be released on Thursday, followed by real earnings data on Friday. 

How Futures Are Trading

As of 3:30 a.m. ET on Monday, the Nasdaq 100 futures climbed 1%, the S&P 500 futures rose 0.62%, while the Dow and Russell 2000 futures gained 0.23% and 0.41%, respectively.

On Stocktwits, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, was ‘bullish’ as of early Monday. The message volume on the SPY and QQQ ETF streams was at ‘high’ levels.

Commenting on the SPY stream, a bullish watcher attributed his positive stance to Buffett’s Alphabet buy and Nvidia’s impending earnings.

Another user said the jobs report, due Thursday, will strengthen the case for a December rate cut. Some of the recent market weakness is attributed to the reduced likelihood of an interest rate reduction following hawkish comments from some Federal Reserve officials.

How Markets Fared Last Week

Tech marred the market's performance last week as AI skepticism abounded and Fed officials struck a hawkish tone. The market recorded a mixed weekly performance as the end of the government shutdown tempered some of the negativity.

For the week, the QQQ ETF fell 0.14% and the iShares Russell 2000 ETF (IWM) fell 1.71%, while the SPY ETF and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.14% and 0.54%, respectively.

LPL Chief Technical Strategist Adam Turnquist noted a weakening momentum signal, which potentially is due to buyer fatigue. "Leadership trends have become another source of concern as relative strength in more defensive areas of the market builds," the strategist said.

"While we haven’t witnessed full-blown trend reversals indicating sustainable defensive leadership, it does highlight the first major sign of risk aversion in over six months."

Turnquist said a breakdown below the November lows would raise the risk for a deeper pullback, potentially toward the October or even August lows, but not a signal that the bull market is over.

Key Catalysts To Watch Out For

Thursday’s September job report, the weekly jobless claims report, the August trade balance report, the minutes of the October Fed meeting, a couple of regional manufacturing survey data, S&P’s flash November manufacturing and services purchasing managers’ indices, and a raft of Fed speeches are among the key reports due for the week.

On Monday, the New York Fed will release the results of its Empire State Manufacturing Survey for November at 8:30 a.m. ET. Economists, on average, forecast a reading of 5.5 for the month, down from 10.7 in the previous month.

Among the Fed officials slated to speak are Vice Chair Philip Jefferson (9 a.m. ET), Minneapolis Fed’s Neel Kashkari (1 p.m. ET), and Fed Governor Christopher Waller (3:35 p.m. ET).

J&J Snack Foods (JJSF), Jinko Solar (JKS,) and Trip.com (TCOM) are among the noteworthy names reporting results on Monday.

How Other Markets Fared

Crude oil futures retreated early Monday and traded below the $60 level, and gold futures also weakened modestly.  The 10-year-old U.S. Treasury note yield held above the 4.1% level, although moving a tad below Friday’s level.  The major Asian markets traded on a mixed note, with the Japanese, Hong Kong, and Chinese markets pulling back, while the rest were higher, although the gains were modest. China’s warning against traveling to Japan amid diplomatic tensions between the two nations impacted sentiment. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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