US Stocks Poised To Gain A Day After Tech Stocks Dragged Nasdaq Down: Analyst Calls Markets 'Overly Optimistic' As S&P 500 Trades At 23x Forward Earnings

Author: Rishabh Mishra | January 14, 2025 06:23am

U.S. stock futures advanced on Tuesday following Monday’s mixed close. Futures of all four major indices rose in premarket trade. Technology stocks dragged the Nasdaq down on Monday, whereas Dow Jones which has the least number of tech constituents rose in trade.

Members of President-elect Donald Trump‘s incoming economic team are considering a gradual increase in tariffs over several months, reported Bloomberg. This approach is designed to enhance negotiating leverage while minimizing the risk of a sudden rise in inflation.

Traders now await the consumer price inflation data this week on Wednesday, which will further clear the case for the Fed to pause the rate cuts.

The 10-year and two-year Treasury notes yielded 4.77% and 4.38%, respectively. The probability of having no change in the interest rates for the upcoming Jan. 31, 2025 decision was at 97.3%, according to CME Group’s FedWatch tool.

Futures	Change (+/-)
Nasdaq 100	0.71%
S&P 500	0.54%
Dow Jones	0.38%
Russell 2000	0.67%

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) was up 0.54% to $584.53 and the Invesco QQQ Trust ETF (NASDAQ:QQQ) rose 0.73% to $509.23, according to Benzinga Pro data.

Cues From The Last Session

Wall Street experienced mixed trading on Monday. The Dow Jones comprised of 30 major companies, saw a substantial increase, driven by a shift of investment towards sectors outside of technology. In contrast, the Nasdaq, heavily weighted towards technology companies, experienced a slight dip. The broader S&P 500 index saw a modest increase.

This market activity follows a period of two weeks of declining stock prices, primarily attributed to a sell-off in technology stocks. However, the Russell 2000 index, which tracks smaller-company stocks, showed a slight increase.

While technology stocks faced headwinds, the energy sector outperformed the market, fueled by rising oil prices. The healthcare and materials sectors also witnessed gains.

Dow rose 358.67 points, or 0.86%, to close at 42,297.12. Nasdaq dropped 0.38% to 19,088.10. The S&P 500 inched up 0.16%, ending at 5,836.22. Russell 2000, on the other hand, rose 0.24% to 2,194.50 points.

Index	Performance (+/-)	Value
Nasdaq Composite	-0.38%	19,088.10
S&P 500	0.16%	5,836.22
Dow Jones	0.86%	42,297.12
Russell 2000	0.24%	2,194.50

Insights From Analysts

Despite Monday’s fall in technology stocks, Jeremy Siegel, the senior economist to WisdomTree said that growth stocks, particularly in the tech sector, remain dominant. “The AI-driven investment narrative continues to support these high-growth names, with no signs yet of a definitive shift toward value,” he added.

He described the markets as “overly optimistic” as the S&P 500, trades at 23x forward earnings. According to Siegel, the consensus earnings growth of 16% for 2025 is likely too high and an 8–9% increase is more realistic. “Consequently, the market could see a correction as valuations adjust to higher rates and moderated growth expectations,” he said.

Analysts at BlackRock, on the other hand, said that they were “pro-risk” and overweight in U.S. stocks. However, they highlighted three areas that could change their view, which includes how U.S. tariffs and fiscal policy shape up.

They are also looking out for “corporate earnings and lofty tech valuations amid the artificial intelligence buildout” to see if this will sour the investor risk appetite. And lastly, the analysts said, “We look for elevated vulnerabilities, like surging bond yields as markets price out rate cuts and corporate debt refinancing at higher interest rates.”

CNBC’s Jim Cramer has offered insights into the recent struggles of the Nasdaq Composite, which failed to rally despite gains in other major indices. Cramer attributed the Nasdaq's decline to a "one-two punch" from the U.S. government. Over the weekend, the Biden administration introduced new restrictions on semiconductor exports, which Cramer criticized as "short-sighted," on Monday.

See Also: How to Trade Futures

Upcoming Economic Data

• NFIB optimism index for December will be released at 6:00 a.m., ET.

• December’s headline and core producer price index data will be announced at 8:30 a.m., ET.

• Kansas City Fed President Jeffrey Schmid will be speaking at 10:00 a.m. ET.

• Fed will release its Beige Book at 2:00 p.m., ET.

• New York Fed President Williams will deliver his opening remarks on the policy at 3:05 p.m., ET.

• On Wednesday, the headline and core consumer price index for December and the Empire State manufacturing survey data for January will be announced at 8:30 a.m., ET.

• Richmond Fed President Barkin will speak at 9:00 a.m., ET.

• New York Fed President Williams will speak at 11:00 a.m., ET.

• Chicago Fed President Goolsbee will speak at 12:00 p.m., ET.

• On Thursday, initial jobless claims till Jan. 11 will be released at 8:30 a.m., ET.

• December’s U.S. retail sales, import price index and Philadelphia Fed manufacturing survey will be announced at 8:30 a.m., ET.

• Business inventories data for November and Home builder confidence index for January will be released at 10:00 a.m., ET.

• On Friday, housing starts and building permits data for December will be released at 8:30 a.m., ET.

• The industrial production and capacity utilization for December will be announced at 9:15 a.m., ET.

Stocks In Focus:

• Calavo Growers Inc (NASDAQ:CVGW) was 3.56% up in premarket as analysts expect it to report quarterly earnings at 30 cents per share on revenue of $161.93 million after the closing bell.

• KB Home (NYSE:KBH) was up 8.82% after it posted better-than-expected fourth-quarter revenue of $2 billion, beating analyst estimates of $1.99 billion.

• Aehr Test Systems (NASDAQ:AEHR) was down 19.07% after it reported worse-than-expected financial results for the second quarter on Monday

• Applied Digital Corp (NASDAQ:APLD) was up 5.34% as analysts expect it to post a quarterly loss at 15 cents per share on revenue of $63.4 million after the closing bell.

• Nature’s Miracle Holding Inc (NASDAQ:NMHI) was up 100% as it entered into a Securities Purchase Agreement with a single institutional investor to sell up to $29.7 million in the aggregate of a newly designated class of convertible preferred stock.

• P3 Health Partners (NASDAQ:PIII) was up 33.04% after the news that it will participate in the 43rd Annual J.P. Morgan Healthcare Conference in San Francisco, California later today.

Commodities, Gold And Global Equity Markets:

Crude oil futures were trading lower in the early New York session by 0.72% to hover around $76.74 per barrel.

The gold spot index was down by 0.02% to $2,678.14 per ounce. The Dollar Index was down 0.34% at 109.587 level.

Asian markets closed higher on Tuesday as Hong Kong’s Hang Seng, India’s S&P BSE Sensex, China’s CSI 300, Australia’s ASX 200, and South Korea’s Kospi index advanced. However, Japan’s Nikkei 225 index fell. European markets were also trading higher.

Read Next:

• Meta Investors Push Mark Zuckerberg To Replace $72B Cash With Bitcoin To Combat Inflation: Here’s What It Means For Investors

Image Via Shutterstock

Posted In: AEHR APLD CVGW KBH NMHI PIII QQQ SPY