U.S. stock futures fell slightly on Monday morning. Dow futures slipped by 97 points, or 0.2%, while S&P 500 and Nasdaq futures lost 0.3% and 0.6%, respectively. This came after both the S&P 500 and the 30-stock Dow registered all-time highs on Friday, marking a sixth straight weekly advance for both benchmarks.
The S&P 500 ended the week 0.85% higher, while the Dow closed up 0.96%. The Nasdaq Composite also climbed 0.80%. The ability of stocks to sustain these gains may hinge on the upcoming earnings season, which is set to pick up pace this week.
About one-fifth of S&P 500 companies are slated to report their earnings through Friday. Thus far, results have been mixed. Of the 14% of S&P 500 companies that have already posted third-quarter results, 79% have beaten expectations, though the magnitude of those beats has been lackluster, according to FactSet’s John Butters.
Investors are optimistic that equities still have room to run but are mindful of stretched valuations ahead of the U.S. presidential election and rising geopolitical risks. “If we’re not really getting the kind of confirmation that the market is worth this elevated price, then we could end up seeing a digestion of gains come fairly soon,” said Sam Stovall, chief investment strategist at CFRA Research. Leading indicators for September are due out on Monday at 10 a.m. ET.
Bernstein has lowered its price target for ASML but still sees a 13% upside. The firm reiterated its outperform rating on the Dutch semiconductor stock, lowering the price target to $815 from $1,052. ASML stock has slipped 4% this year.
Dow futures dip as earnings approach
Analyst Sara Russo believes the stock has been unfairly punished, with de-ratings more pronounced compared to historical averages. She sees a structural recovery for the stock by 2026 despite current headwinds.
Loop Capital upgraded shares of the Chinese e-commerce retailer JD.com from hold to buy, raising the price target to $49 from $48, which corresponds to about 23% upside. Analyst Rob Sanderson expects the company to exceed current estimates for its third-quarter earnings, driven by strong September sales bolstered by government-sponsored trade-in rebates. He also cited cost-savings efforts and new stimulus initiatives from the Chinese central bank as additional catalysts.
Shares of JD have soared 38% in 2024. Barclays downgraded UPS from equal weight to underweight, keeping its price target at $120, which implies a potential 12% slide from Friday’s close. Analyst Brandon Oglenski pointed to near-term risks to UPS’ earnings and long-term competitive pressures from Amazon and FedEx.
He noted that UPS’s ability to grow dividends in the near future is limited due to pandemic-era increases and mounting competition. European markets opened slightly lower on Monday. The pan-European Stoxx 600 traded down 0.1% shortly after the opening bell, with most sectors in negative territory.
As of Friday’s close, 79% of the 14% of S&P 500 companies that have reported earnings this season have exceeded expectations. A significant number of companies are set to report this week, which will provide further clarity on market conditions. Leading indicators for the month of September are due out at 10 a.m. ET on Monday.
Economists polled by FactSet expect a 0.3% decrease from the prior month, following a 0.2% dip.
