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MARKET SNAPSHOT: S&P Gears Up To Break 4-day Losing Streak, With DC In Focus

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12/07/2017 | 01:11pm CET

By Sara Sjolin, MarketWatch

Tech stocks poised for recovery as Broadcom results spread cheer

The S&P 500 was shaping up Thursday to break its longest losing run since March, as traders welcomed upbeat earnings from chip maker Broadcom.

Futures for the other major U.S. stock benchmarks were mixed, as traders digested continued progress on tax reforms out of Washington, and as the market started to look ahead to the monthly jobs report due Friday.

What are futures doing?

Futures for the Dow Jones Industrial Average slipped 10 points, or 0.04%, to 24,147, while those for the S&P 500 index added 1.80 points, or 0.1%, to 2,631. Futures for the Nasdaq-100 index climbed 17 points, or 0.3%, to 6,310.

The gains come after a mixed session on Wednesday , when the tech-heavy Nasdaq Composite Index outpaced the other benchmarks and closed 0.2% higher after falling for three-days straight.

However, the S&P 500 index slipped 0.01%, enough to make for a fourth straight lower close, its longest losing streak since March. The Dow average ended down 0.2% on Wednesday.

What's driving the markets?

Tech stocks look to be making something of a comeback after taking a battering earlier this week. From Friday through Tuesday, the tech-heavy Nasdaq fell 1.6%, with analysts largely blaming the drop on profit-taking after a big rally and on concerns about how the U.S. tax overhaul will impact the tech sector.

Both the House and Senate passed their own versions of the tax bill last week, and now the two need to bridge their differences and agree on a final bill for President Donald Trump to sign. The Republican-led Senate late Wednesday agreed to begin formal negotiations (https://www.wsj.com/articles/senate-votes-to-begin-tax-overhaul-negotiations-with-house-1512609708) with the House, spurring hopes the final tax overhaul will be completed by a self-imposed deadline of Dec. 22.

Another reason for eyes to turn to Washington was the potential for a U.S. government shutdown. Trump is scheduled to meet congressional leaders on Thursday to discuss a bill to keep the government open. A bill to avoid a shutdown will also be up for a vote in the House on Thursday, after the House Rules Committee on Wednesday put together a temporary funding package.

Investors were also looking ahead to the closely watched nonfarm payrolls report out on Friday.

What are strategists saying?

"The outlook for the Dow has turned near-term corrective," said Richard Perry, market analyst at Hantec Markets, in a note. "It will be interesting to see now how the bulls react to an intraday rebound. If support can begin to build and hold, then the bulls can begin to think of buying opportunities. Friday's low at 23,922 is initially supportive, with 24,350 now initial resistance."

"A decent read through from the ADP employment change yesterday sets up for a nonfarm payrolls tomorrow, where with a rate hike nailed on for December, a dollar positive/risk positive reaction would meet a positive surprise in the data," he added.

Which stocks are in focus?

A premarket rally in Broadcom Ltd.(>> Broadcom Limited) helped beef up the S&P and Nasdaq on Thursday. Shares of the chip maker climbed 5.7% after it reported earnings that topped Wall Street estimates late Wednesday.

Shares of Digital Power Corp.(>> Digital Power Corporation) jumped 35% ahead of the bell. The power-supply provider's stock tanked 25% on Wednesday in a late-session selloff, after being up as much as 31% earlier in the day, on talk of a deal with online retailer Amazon.com Inc. (>> Amazon.com) . But the company said late Wednesday that it had "entered into no agreement and has received no order from Amazon."

Lululemon Athletica inc.(>> Lululemon Athletica inc.) rallied 8.3% after the apparel retailer late Wednesday reported third-quarter earnings and sales above estimates .

General Electric Co.(>> General Electric Company) inched 0.6% higher ahead of the bell after news the industrial conglomerate's power business will cut 12,000 jobs globally.

Okta Inc.(>> Okta Inc) shares could also move on Thursday the identity-management company late Wednesday posted quarterly results that beat forecasts .

Citigroup Inc.(C) was in focus after the bank said late Wednesday it's likely to take a $20 billion hit to profits under the new tax plans passed by Congress.

Dollar General Corp.(>> Dollar General Corp.) moved 1.3% higher after the dollar-store operator posted revenue that topped expectations.

What's new in economics?

A reading on weekly jobless claims is due at 8:30 a.m. Eastern Time, while the flow of funds report for the third quarter comes out at noon Eastern. Consumer credit for October is on the docket at 3 p.m. Eastern.

William Dudley, president of the Federal Reserve Bank of New York, is scheduled to give introductory remarks at the "Higher Education Financing and Costs and Returns of Higher Education" event, held at the Federal Reserve Bank of New York, at 8:30 a.m. Eastern.

What are other markets doing?

Asian stocks closed mixed, while European equities mostly traded higher in the early going.

The ICE Dollar Index was up 0.1% at 93.718, rising for a fourth straight session.

Oil futures rebounded, rising 0.5%, while gold prices dropped 0.6%.

Bitcoin continued its rally, breaking through $15,000 , just a day after topping the $14,000 level for the first time.

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