Stock futures are flat after Nasdaq posts a second day of gains

Stock futures were barely changed Monday evening after the Nasdaq Composite posted a second day of gains, helped by Tesla and other tech shares.

Futures tied to the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 hovered just below the flat line.

In regular trading, the Nasdaq Composite posted a 0.6% gain, helped by a 6% rally in Tesla. Meanwhile, the Dow erased a 304-point gain and ended down almost 113 points, while the S&P fell 0.1%.

Stocks climbed to start the day, following a winning week for the major averages. Investors took comfort in the possibility that the Federal Reserve can slow the economy and bring down inflation without tipping the economy into a recession, and assumed a risk-on stance.

Monday also marked the end of the first five trading days of 2023, during which the S&P 500 gained 1.1%. According to a classic stock market indicator, that kind of early strength could bode well for the rest of the year.

Tom Lee of Fundstrat called it a “strong omen” and said the market is set up for a 20% rally this year.

The Fed wants financial conditions “to stay tight,” Lee said on CNBC’s “Closing Bell: Overtime.” “Dollar, stocks, bonds – everything’s kind of easing so they’re probably a little worried and they want to be sure inflation is in fact dead. But one of the changes especially since October is that inflation has been under shooting.”

Depending on how CPI data fares Thursday, the bond market could push the Fed to make February the last rate hike before cuts, Lee added.

On Tuesday, investors will get wholesale trade data and will be monitoring a speech by Fed chair Jerome Powell at a conference in Sweden.

There are no earnings reports scheduled for Tuesday but the big banks will deliver their updates later in the week.