Market Snapshot: U.S stock futures rise amid cautious trading as Thanksgiving looms

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U.S. stock futures inch higher as traders seek fresh range-breaking catalyst.

How are stock-index futures trading
  • S&P 500 futures
    ES00,

    rose 10 points, or 0.2%, to 3968

  • Dow Jones Industrial Average futures
    YM00,
    +0.03%

    added 77 points, or 0.2%, to 33812

  • Nasdaq 100 futures
    NQ00,
    -0.13%

    climbed 28 points, or 0.2%, to 11616

On Monday, the Dow Jones Industrial Average
DJIA,
-0.13%

fell 45 points, or 0.13%, to 33700, the S&P 500
SPX,
-0.39%

declined 15 points, or 0.39%, to 3950, and the Nasdaq Composite
COMP,
-1.09%

dropped 122 points, or 1.09%, to 11025. The S&P 500 is up 10.4% from its 2022 closing low hit on Oct. 12, but remains down 17.1% for the year to date.

What’s driving markets

Stock futures were a touch firmer but traders seemed reluctant to place bold bets as they weighed concerns about fresh COVID-19 restrictions in China and the prospects for tighter Federal Reserve policy.

Adding to the caution was a holiday-shortened week for Wall Street, where volumes traditionally tend to thin notably in the run up to Thanksgiving on Thursday and Black Friday.

“The irony is that the China reopening story has been a big positive driver of China-related risk and overall markets over the last couple of weeks, so we are trading between feast and famine on this story,” wrote Jim Reid, strategist at Deutsche Bank, in a morning note.

“Both could of course be ultimately right. There might be many more restrictions in the near term but stronger more durable re-openings by the spring. Markets are struggling to price this at the moment though,” Reid added.

The lackluster action in stocks also reflects a market that has stalled following a rally off 2022 lows, and as investors look to the next catalyst to help push the S&P 500 out of its recent relatively tight range of roughly 50 points, on a closing basis, held over the past two weeks.

The ceiling of that range is 4,000, and unfortunately for equity bulls it is unlikely the S&P 500 will finish much above it even in a year’s time, according to Goldman Sachs.

In a note published late on Monday, the Goldman strategy research team led by David Kostin, said that assuming the U.S. economy manages a soft landing then the stock market will experience “less pain but also no gain” in 2023.

“The performance of U.S. stocks in 2022 was all about a painful valuation de-rating but the equity story for 2023 will be about the lack of EPS growth. Zero earnings growth will match zero appreciation in the S&P 500. Our valuation model implies an unchanged P/E multiple of 17x and a year-end index level of 4000,” said Kostin.

Emblematic of the market’s travails over the past year or so are the share price collapses of former lockdown-linked work from home darlings, such as Zoom
ZM,
-1.69%
.
Stock in the videoconferencing group was off about 9% in premarket trading having delivered soft fourth quarter guidance after Monday’s closing bell.

There are no U.S. economic updates of note set for release on Tuesday. However, Kansas City Fed President Esther George is due to speak at 2:15 p.m.