Stocks could easily get caught in another updraft Wednesday, even after the Dow broke its feverish 10-day winning streak.
There are just a few data points due Wednesday: productivity and costs at 8:30 a.m. ET and wholesale trade at 10 a.m. Earnings, likewise, are expected before the bell from Mylan Labs, Wendy’s, Scripps Networks and Echostar. 21st Century Fox, Iamgold, Ambac, Agrium, Flowers Foods and Planet Fitness are among companies reporting after the close.
Market focus could also be on some companies that fell after Tuesday’s closing bell. Both Priceline and Disney were down after earnings reports, and Netflix fell after Disney said it would pull its movies from the streaming giant and start its own streaming service.
Stocks ended lower Tuesday, after President Donald Trump warned North Korea that threats will be “met with fire and fury.” That was after earlier reports that North Korea has produced a nuclear weapon that can fit in its missiles. While both those headlines sounded like an escalation of tensions, the markets barely moved.
“I think the market probably thinks that Trump is smart enough to know you don’t want to start a nuclear war. I don’t think they want to start one, either,” said Sam Stovall, chief investment strategist at CFRA.
“I think the market is continuing to grind higher because that is the path of least resistance. I do think about 2,500 on the S&P being that rusty door that could end up serving as a pretty stiff resistance against a more meaningful move higher,” said Stovall.
Ari Wald, technical strategist at Oppenheimer, said the S&P 500, which hit an intraday high Tuesday, has basically been moving sideways since July. He said seasonality could be a factor, with August and September being the worst months of the year. But he sees the trend higher as ultimately more powerful.
“We think any near term seasonal pullback of 1, 2, 3 percent should be met with buying interest, and we expect higher over the coming months – through the year end,” said Wald. His target on the S&P is 2,500.
The dollar was lower Tuesday, then higher after JOLTs data showed a record amount of job openings was released at 10 a.m. ET Tuesday. But the dollar index gave up gains in late trading.
Treasury yields were mostly higher, with the 10-year at 2.26 percent. On Wednesday, there is a 1 p.m. ET auction of $23 billion 10-year notes.
“The 10-year is a sweet spot for the Japanese buyers, and this is a seasonally good time for them to be putting money in,” said Aaron Kohli, director, fixed income strategy at BMO. The auction, therefore, could be well supported by foreign buying interest.