Dow Jones, Nasdaq, S&P 500 weekly preview: Q4 earnings enter final stretch

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Dow Jones, Nasdaq, S&P 500 weekly preview: Q4 earnings enter final stretch -- The S&P 500 notched yet another record high last week, closing above the 5,100 mark for the first time ever. The Nasdaq Composite index also touched a new all-time high, exceeding its previous peak from 2021. The tech-oriented Nasdaq rose more than 1.1% on the day, surging as high as 16,302, before closing at 16,274. Meanwhile, the Dow Jones Industrial Average added 90.99 points, or 0.23%, to 39,087.38.

As for this week, it’s another important one in terms of economy-related events, with the Non-Manufacturing Purchasing Managers' Index (PMI), ADP Employment , and non-farm payroll report all set to come out in the coming days.

Moreover, Federal Reserve Chair Jerome Powell is set to appear before Congress on March 7, where he will give a much-anticipated update on monetary policy.

Although Powell is not expected to offer any fresh insights, he is expected to emphasize the Fed's need for further evidence of inflation slowing down before contemplating any cuts in interest rates.

“We expect him to lean hawkish and stick to the script he has been using since the January FOMC meeting, namely: the Fed needs more convincing evidence that inflation is on track to get back to 2%,” ANZ analysts said in a note.

The analysts have observed that the U.S. economy is in a "reasonably good shape" and noted a significant easing in inflation over recent months. However, they believe the decrease in inflation hasn't been sufficient to assure a steady reversion to the central bank’s annual 2% target.

Investors brace more AI, retail earnings

In addition to major economic events, much of investors' attention this week will also be directed toward the final stretch of the Q4 earnings season.

It could be a big few days for artificial intelligence, as Broadcom (NASDAQ: AVGO ) and MongoDB (NASDAQ: MDB ) are scheduled to announce their earnings.

While Nvidia (NASDAQ: NVDA ) continues to garner the biggest chunk of investor attention, Broadcom’s report this week will not be overlooked.

Recognized as one of the leading contenders in AI chip technology, the company collaborates with tech giants to create specialized chips for AI projects. JPMorgan (NYSE: JPM ) predicts Broadcom's AI-related revenues will reach between $8 billion and $9 billion this year.

As for MongoDB, FactSet analysts expect the company to report a 21% increase in sales year-over-year, amounting to $437 million for its January-ending quarter, while its adjusted earnings per share are anticipated to drop 19% to 46 cents.

Furthermore, it's also significant for retail companies, with Target (NYSE: TGT ), Macy's (NYSE: M ), and several others set to release their financial reports.

Dollar Tree (NASDAQ: DLTR ), Foot Locker (NYSE: FL ), Gitlab (NASDAQ: GTLB ), Burlington Stores (NYSE: BURL ), and Kroger (NYSE: KR ) will also report this week.

What analysts are saying about US stocks

Bank of America (NYSE: BAC ): “We raise our S&P 500 year-end target to 5400 (implying 5% upside from current levels) from 5000 primarily on tweaks to our fair value assumptions (more below/inside). But our bullish conviction has cooled since publishing our 2024 Outlook amid improving sentiment across Wall Street.”

JPMorgan: “We continue to believe that this, ultimately unhealthy, high concentration and narrow leadership is set to stay for a while longer. To buy Value and International stocks one needs to see a reflationary backdrop, in our view, but we could have the opposite.”

UBS: "Since 4Q23, markets have soared in anticipation of a goldilocks scenario almost fully discounting risks. But we think investors should approach 2024 with cautious optimism, discipline, and sufficient agility to navigate a macro regime where the narrative could change rapidly. We think hedge funds are a well-suited tool to tackle some of the challenges that 2024 may bring.”

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