After resiliently resisting selling pressure, the market could be in for some weakness on Wednesday as traders position themselves defensively ahead of the key Main Street catalysts for the rest of the week. The index futures are modestly lower early Wednesday. Traders may not have much to look forward to in terms of data as merely the routine weekly mortgage application data and new homes sales report for August are due for the session.

It would be interesting to see if the week mortgage applications volume data will receive a boost from the recent pullback in mortgage rates ahead and amid the Fed rate cut. Micron Technology Inc.’s MU earnings report is in the spotlight as traders strive to gauge artificial intelligence technology-related demand.

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY fell 0.07% to $570.92 and the Invesco QQQ ETF QQQ moved down 0.19% to $484.46, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks ended Tuesday’s session higher yet again despite some nervous moments in early trading on the back of the September consumer confidence reading that unexpectedly fell. Following the data, Jamie Cox, Managing Partner at Harris Financial Group, said, “It’s never good to see consumer confidence fall this much.”

The strategist attributed the weak consumer confidence to concerns about the implications of the upcoming election, the increasing conflict around the world, and the stubbornly high cost of food and credit. The 50 basis-point Fed funds rate cut last week seemed more correct in light of these data, he added.

The major indices opened higher but reversed course after the data. After hitting a bottom in late-morning trading, the tech-heavy Nasdaq Composite and the broader S&P 500 Index bounced back in a V-shaped recovery before moving sideways in the afternoon. Nvidia Corp. NVDA ended up nearly 4%, providing a shot in the arm the these two indices, and China’s stimulus measures also kept the risk-on mood intact.

The Nasdaq Composite ended at the 18K+ level for the first time since time since late-July. The S&P 500 hit fresh intraday and closing highs.

Despite seeing volatility throughout the session, the 30-stock Dow Industrials Average also clocked new intraday and closing highs.

Insights From Analysts:

With Sept. 22, the first day of autumn, now in the rearview mirror, the historically rough month for the market is nearly over, said LPL Financial Chief Technical Strategist Adam Turnquist. With less than five trading sessions remaining before October, stocks are on track to outperform historical averages for September, barring any major market-moving events, he said.

The strategist noted that the S&P 500 is up 1.2% month-to-date, compared to the average decline of 0.7% since 1950. The declines in the past four years are at 4.9%, 9.3%, 4.8%, and 3.9%, respectively.

This bodes well for the fourth quarter, Turnquist said. “Based on historical performance for the S&P 500, strong performance and momentum in the first nine months of the year could signal more gains ahead,” he said. Over the last 75 years, the fourth quarter has generated negative returns only eight times when momentum was strong during the first three quarters, he said.

Even In four of those eight years, returns in October–December were only slightly lower, in the range of 0% and -1.5%, Turnquist said. The largest fourth-quarter decline after positive performance through September came in 1987, which includes the infamous “Black Monday” market crash on October 19, when the S&P 500 famously shed over 20% in one day, he added.

Looking ahead, the analyst sees Fed policy decisions, a much-anticipated Presidential election, and third-quarter earnings as major market catalysts.

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Upcoming Economic Data:

• The Mortgage Bankers Association is due to announce its weekly mortgage application volume data at 7 a.m. EDT. In the week ended Sept. 13, mortgage applications volume climbed 14.2% week-over-week on a seasonally adjusted basis. The spike came as the 30-year fixed mortgage rate was 6.15%, the lowest since Sept. 2022.
• The Commerce Department is scheduled to release its August new home sales report at 10 a.m. EDT. The consensus estimate calls for a seasonally adjusted annual rate of 700,000, down from the 739,000 rate in July.
• The Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. EDT.
• The Treasury will auction five-year notes at 1 p.m. EDT.
• Federal Reserve Governor Adriana Kugler is scheduled to speak at 4 p.m. EDT.

Stocks In Focus:

• Trump Media & Technology Group Corp. DJT rose about 7% in premarket trading, tacking on to Tuesday’s gains, after the initial public offering lock-up period for insiders expired.
• Meta Platforms, Inc. META shares could be in the spotlight as the two-day Meta Connect technology-focused event gets underway on Wednesday.
• Cintas Corporation CTAS is due to announce its financial results before the market opens, while H.B. Fuller Company FUL, Micron, Jefferies Financial Group Inc. JEF and Worthington Enterprises, Inc. WOR are among those reporting after the close.

Commodities, Bonds And Global Equity Markets:

Crude oil futures moved lower but held above the $71-a-barrel level, while gold futures continued to shine in record territory. Bitcoin BTC/USD was once again flattish around the $63.5K level. The 10-year Treasury note climbed 1.7 points to 3.753%.

The major Asian markets traded on a mixed note, with China, Hong Kong and Taiwan extending their gains amid continued optimism over the stimulus measures announced by the People’s Bank of China this week. Most others settled lower. European stocks weakened in early trading on Wednesday.

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