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Stock Futures Drift Higher Ahead of Powell Testimony


U.S. stock futures ticked up Wednesday ahead of testimony from Federal Reserve Chairman

Jerome Powell.

Futures for the S&P 500 edged up 0.2%, while contracts for the Dow Jones Industrial Average were relatively flat, suggesting that both major indexes may tread water at the opening bell. The S&P 500 fell 0.4% on Tuesday. Nasdaq-100 futures rose 0.5% Wednesday, signaling that technology stocks will outperform for a second day.

Stocks have powered to record highs on expectations of a strong economic rebound and a bumper set of corporate results in the earnings season just getting under way. However, some investors are wary of potential hurdles for the broad market rally up ahead.

One factor making money managers cautious is uncertainty about how long the bout of higher inflation—running at its quickest pace in 13 years—will last and how the Fed will respond. Another is the spread of the delta variant of coronavirus, which on Wednesday prompted Australian officials to extend a lockdown of Sydney, while South Korea tightened curbs.

“We would not be surprised if you had a bit of a pullback,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management.

Longer term, however, Mr. Morris is bullish about the outlook for the market. “You’ve still got phenomenal growth and at the end of the day, it is earnings, earnings, earnings that drive equity prices.”

BlackRock

shares fell 2.1% before the market opened. The fund-management giant said it added $81 billion in new investor money in the second quarter, less than it did a year ago.

Bank of America

shares lost 1.9% in premarket trading after the bank posted revenue that fell short of analysts’ expectations.

Rival lenders

JPMorgan Chase

and

Goldman Sachs Group

kicked off the reporting season with blockbuster results on Tuesday.

Shares of

Delta Air Lines

gained 2.1% premarket after the airline reported its first quarterly profit since the start of the coronavirus pandemic. Apple rose 2% after Bloomberg News reported that the company had asked suppliers to make 20% more new iPhones than in recent years.

Oil prices slid after the Organization of the Petroleum Exporting Countries reached a compromise with the United Arab Emirates over production, resolving a standoff that whipsawed energy markets this month. Brent-crude futures, the international benchmark, ticked down 0.2% to $76.36 a barrel in a choppy session.

In bond markets, the yield on 10-year Treasury notes edged down to 1.385%, from 1.415% on Tuesday. Bond yields and prices move in opposite directions.

Data showing that U.S. consumer prices jumped 5.4% in June from a year earlier have sharpened focus on Mr. Powell’s appearance before the House Financial Services Committee. Mr. Powell is due to present the central bank’s twice-yearly report on monetary policy starting at noon ET, followed by testimony to the Senate on Thursday.

Wall Street indexes fell on Tuesday after a higher-than-expected consumer price report.



Photo:

brendan mcdermid/Reuters

Investors will be alert for any guidance about when and how the Fed plans to wind down its bond-buying program. They are also looking for clarity about the central bank’s willingness to let inflation run above target.

“What investors want to know more of is: What do you mean by average inflation targeting?” said Remi Olu-Pitan, a fund manager at Schroders. That is the new system adopted by the Fed almost a year ago, under which the central bank will allow inflation to overshoot its 2% goal to make up for periods when it lagged behind.

In overseas markets, the Stoxx Europe 600 slipped 0.2%, led lower by shares of travel, leisure and real-estate companies.

Japan’s Nikkei 225 lost 0.4% by the close of trading and China’s Shanghai Composite Index dropped 1.1%. A regulatory crackdown on consumer-technology companies is making investors nervous about the Chinese market even as the People’s Bank of China appears to be stimulating the economy, Ms. Olu-Pitan said.

New Zealand’s dollar rose 1% to $0.70 after the Reserve Bank of New Zealand said it would halt purchase of government bonds this month as the economy rebounds from the shock of coronavirus.

Write to Joe Wallace at [email protected]

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Stock Futures Rise, Bitcoin Regains Some Ground After Multi-Month Lows


U.S. stock futures rose and bond yields crept lower as investors grew more comfortable with the inflation outlook and the pace of the economic recovery.

Futures tied to the S&P 500 added 0.5%, pointing to a positive start to the week after the broad-market index fell moderately for two weeks in a row. Nasdaq-100 futures rose 0.7%, suggesting gains for technology stocks after the opening bell.

Investors are keeping a close eye on inflation indicators to determine whether a rise in prices will be temporary or longer-term. Companies that are able to pass along higher costs to consumers such as in energy and materials have been an increasingly popular trade, while technology companies’ shares and bonds have lagged.

“Inflation concerns have lessened, there’s more of a wider recognition that inflation will be transitory,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “This is reflecting the fact that we hit the fastest part of the recovery. Growth, while continuing, is going to be at a decelerating pace.”

In bond markets, the yield on the benchmark 10-year Treasury note declined to 1.618% Monday from 1.629% Friday. Yields fall when prices rise.

Cryptocurrencies continued a dramatic stretch of trading. Bitcoin regained some ground after touching multi-month lows Sunday and traded around $36,450, a 3.4% rise from Friday at 5 p.m. ET. The cryptocurrency has lost over 40% of its value since its mid-April peak.

“Decentralized finance is facing its first real challenge since inception. We don’t think that this is the end, the bubble has not really popped yet,” said Monica Defend, global head of research at Amundi. “Central banks are ready to play in the digital currency field, I expect with the central banks in play, there will be more regulation to come and more transparency.”

The Chicago Fed National Activity Index, which is seen as a gauge of economic activity and inflationary pressure, will be published at 8:30 a.m. ET.

Federal Reserve Gov. Lael Brainard will be speaking about digital currencies at a virtual event organized by CoinDesk at 9 a.m.

Earnings season is winding down. This week, technology companies including

Nvidia

on Wednesday and

Salesforce.com

and Dell Technologies on Thursday, are set to report.

In premarket trading, Moderna rose 2.2% after striking a deal with

Samsung’s

biotech division to manufacture its Covid-19 vaccines in South Korea.

In commodities, global benchmark Brent crude rose 1.8% to $67.65 a barrel. Analysts at

Goldman Sachs

put out a note on Sunday with a forecast that it will reach $80 by summer.

“It’s still kind of punching in the green light for inflation flows into commodities,” said Gregory Shearer, a commodities analyst at JPMorgan. But the Federal Reserve minutes last week, “where they began to talk about tapering, this makes people somewhat less concerned about [inflation] running away out of hand.”

Overseas, the pan-continental Stoxx Europe 600 was relatively flat, wavering between small gains and losses. Monday is a public holiday in several European countries, including Germany and Denmark.

Among European equities, IT services company Solutions 30 plunged over 70% after auditor EY declined to sign off on its accounts.

In Asia, major benchmarks were mixed. The Shanghai Composite Index advanced 0.3% while Hong Kong’s Hang Seng Index slipped 0.2%.

Investors are growing more comfortable with the inflation outlook.



Photo:

Courtney Crow/Associated Press

Write to Anna Hirtenstein at [email protected]

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Stock Futures Tick Up Ahead of Economic Data


U.S. stock futures edged up Friday ahead of fresh data on manufacturing and services sectors that will provide more insights into the pace of the economic recovery.

Futures tied to the S&P 500 ticked up 0.3%, suggesting that the broad market gauge may end the week on a tepid note after dropping 0.4% by the close on Thursday. Nasdaq-100 futures edged 0.2% higher Friday, pointing to big technology stocks sealing their best week since mid April.

Stocks have ground lower this week on mounting concern that inflation will rise and remain elevated as the economy rebounds. Sentiment reversed on Thursday after initial jobless claims, seen as a proxy for layoffs, fell to a new pandemic low. Investors have poured back into risky assets including growth stocks and cryptocurrencies, prompting prices to rebound from the week’s lows.

“There was some relief that the labor market recovery is under way in the U.S. and we’re seeing some nervousness about inflation ebbing away,” said

Kiran Ganesh,

a multiasset strategist at UBS Global Wealth Management.

Some money managers are betting that some sectors—such as banking and energy—could benefit in particular as the economy rebounds to pre-pandemic levels.

“If we can get a combination of confidence that inflation is under control, and signs of economic momentum coming through, I think there is still good opportunities to be had, in the reopening type of sectors in particular,” Mr. Ganesh said. Stocks that performed poorly during the pandemic could become the new drivers that lead major indexes higher, he added.

Ahead of the market opening, oat-milk maker Oatly rose over 10%. The shares jumped 19% in their trading debut on Thursday.

Preliminary surveys of purchasing managers, due to be released at 9:45 a.m. ET, are expected to show that the U.S. manufacturing and services industries expanded in May.

In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 1.639%, from 1.631% on Thursday.

Bitcoin edged up 2% from its 5 p.m. ET price, trading at about $40,900. The digital asset has rebounded sharply from its Wednesday intraday low of $30,444.93, but is still down over 18% since 5 p.m. last Friday.

“The context of this week is that markets are tired,” said

Paul O’Connor,

head of a multiasset team at Janus Henderson. “Stocks keep losing momentum, speculative areas of the market are losing momentum. There is fatigue here.”

Surveys of purchasing managers across Europe showed that manufacturing and services activity increased in the eurozone this month. The pan-continental Stoxx Europe 600 edged up 0.5%.

In Asia, major benchmarks were mixed by the close of trading. The Shanghai Composite Index declined 0.6% while Japan’s Nikkei 225 advanced 0.8%.

Traders worked on the floor of the New York Stock Exchange on Thursday.



Photo:

Courtney Crow/Associated Press

Write to Anna Hirtenstein at [email protected]

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Stock Futures Edge Down After S&P 500 Hits Record


U.S. stock futures edged lower Friday as investors assessed fresh waves of Covid-19 infections globally that could hamper global supply chains and drive up inflation.

Futures tied to the S&P 500 ticked down almost 0.3%, a day after it closed at a record. The broad market index remains on track for its best month since November. Nasdaq-100 futures declined 0.3%, suggesting that technology shares may be among the weakest performers after the opening bell.

Rising Covid-19 cases in Brazil and India and signs of weakening in China’s manufacturing sector are sapping some of the optimism that took the major indexes up to all-time highs earlier in the week. New variants are threatening to hobble global travel, convulse supply chains further and slow the recovery, investors say.

Signs that the U.S. growth is accelerating are also stoking concern that inflation may rise too much, driven by a persistent shortage of products like electronic chips and the prospect of more fiscal stimulus flooding markets. Persistent inflation can erode portfolio returns.

“That is where the market is, wrestling between those two,” said Edward Park, chief investment officer at Brooks Macdonald.

If the supply constraints and inflationary factors extend into next year, “the growth parts of the markets, which are supported by this ultra cheap money environment, will struggle,” he added.

New economic data from China weighed on sentiment, with official gauges for manufacturing falling short of expectations in April. China’s statistics bureau said global chip shortages, international logistics jams and rising delivery costs have weighed on factory operations.

Increased costs for businesses due to supply-chain issues could be passed on to consumers, boosting prices, investors said.

High cases of Covid-19 in India, Brazil and Japan have bolstered concerns that new variants could emerge and spread globally. A variant of the coronavirus first spotted in India has been detected in the U.S. and 18 other countries and territories. Another variant from Brazil that has been detected in more than 30 nations.

“The third wave is the big thing,” Mr. Park said. “The greater the case count, the greater the chance a new variant is created that unwinds a lot of the good work being done in the vaccine rollout program.”

In bond markets, optimism about U.S. growth prospects—stemming from better-than-expected corporate earnings, signs of the labor market’s recovery, and President Biden’s new $1.8 trillion spending proposal—have encouraged money managers to sell government bonds, considered the safest assets. There are also growing concerns that inflation could curtail the returns from fixed-income securities, and from stocks that are richly valued for their future cash flow.

The yield on the 10-year Treasury note ticked up to 1.645% from 1.639% Thursday, and is poised to extend its advance for five of the past six days. Yields rise when prices fall.

“You’re seeing a lot of companies reporting pricing pressures, supply chain disruptions, coupled with all this extra stimulus coming through from the U.S. that is why people are now really starting to focus on inflation,” said Edward Smith, head of asset allocation research at U.K. investment firm Rathbone Investment Management. “Persistent inflation beyond spring is the biggest risk to markets this year, because it could cause the Fed to taper and hike interest rates sooner than expected.”

Investors are likely to continue monitoring earnings, with energy giants

Chevron

and

Exxon Mobil

set to disclose results before the opening bell.

Fresh figures on U.S. consumer spending, due at 8:30 a.m. ET, are expected to show a rebound in March. Economists anticipate that Americans boosted spending as warmer weather and the vaccine rollout encouraged people to spend stimulus checks and savings.

Overseas, the pan-continental Stoxx Europe 600 edged 0.1% higher.

Most major indexes in Asia declined by the close of trading. Hong Kong’s Hang Seng shed almost 2%. The Shanghai Composite Index, South Korea’s Kospi and Japan’s Nikkei 225 each fell 0.8%.

Endeavor CEO Ariel Emanuel, fourth left, rang the New York Stock Exchange opening bell on Thursday to celebrate his company’s IPO.



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Courtney Crow/Associated Press

Write to Caitlin Ostroff at [email protected]

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Stock Futures Waver Amid Rising Covid-19 Cases


U.S. stock futures wobbled Wednesday as an increase in global Covid-19 infection levels led to concerns about the pace of economic recovery.

Futures tied to the S&P 500 and the Dow Jones Industrial Average wavered between gains and losses after two straight days of declines. Technology-heavy Nasdaq-100 futures slid 0.3%.

A new wave of Covid-19 infections is sweeping through a number of countries including India and Japan, raising the prospect of fresh hurdles to the anticipated global economic rebound. Health authorities are also warning that new variants may emerge that are resistant to the existing batch of coronavirus vaccines. Given those concerns, investors are putting the brakes to what has been a furious rally in stocks in recent weeks, leaving the major indexes hovering near record highs.

“There are still risks in this market, particularly as it relates to the vaccine rollout and virus mutations,” said Shoqat Bunglawala, head of international multiasset investments at Goldman Sachs Asset Management. “We’re still likely to be in an environment with some volatility.”

Investors are also closely monitoring corporate earnings to see if the current valuations of expensive stocks can be justified.

Verizon Communications

and

NextEra Energy

are among a string of companies scheduled to report quarterly results before the market opens.

Chipotle Mexican Grill

will post earnings after the New York closing bell.

“We expect earnings to surprise on the upside, but the risks are asymmetric. In an environment where markets are at record highs, any company that doesn’t deliver is really punished,” said

Luca Paolini,

chief strategist at Pictet Asset Management. “Over the next few months the direction of earnings will determine the direction of the market.”

The retreat in U.S. stocks this week is simply a “normal pause” in a bull market, with investors taking the opportunity to book profits and reassess their risk appetite, Mr. Paolini said. “As long as the U.S. economy is strong, it’s not really worth the risk of betting against the equity market.”

Ahead of the market open, shares in

Netflix

fell almost 8% after the streaming giant said subscriber growth for the first quarter was weaker than expected.

In bond markets, the 10-year U.S. Treasury yield edged up to 1.575%, from 1.562% on Tuesday. Yields rise as prices fall.

Overseas, the pan-continental Stoxx Europe 600 climbed 0.5% after its biggest one-day drop since late December.

In Asia, most major stock indexes closed lower. Japan’s Nikkei 225 fell 2%, while Hong Kong’s Hang Seng declined 1.8%. The Shanghai Composite Index ended the day relatively flat.

Investors are looking to results to gauge whether high equity valuations are justified.



Photo:

Courtney Crow/Associated Press

Write to Caitlin Ostroff at [email protected]

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Stock Futures Mixed After Record-Setting Rally


U.S. stock futures were mixed Friday, with the technology sector poised to decline and the Dow Jones Industrial Average on track to notch a fresh record.

Futures tied to the S&P 500 edged down 0.3%, pointing to a decline after the opening bell. The broad-market index closed at an all-time high record on Thursday. Contracts linked to the Dow ticked up 0.2% in choppy trading. The blue-chips index had also closed at a record.

Stocks have broadly rallied this week following a rebound in technology shares and growing appetite for sectors like banking and energy that may benefit from the economy rebounding. On Friday, money managers again pulled funds from government bonds as their appetite for the safest assets waned. That sent yields ticking up and sapped demand for richly valued tech shares.

Prospects for the economy have brightened with President Biden signing the $1.9 trillion fiscal stimulus package on Thursday. He also said every adult in the U.S. will be able to get a vaccine by May 1. The moves are expected to accelerate the reopening and spur growth.

“Markets will take a break after all the news we had yesterday,” said Sophie Chardon, a cross-asset strategist at Lombard Odier. “This all points to the fact that we are in a recovery, especially given all the substantial policy support both on the fiscal and monetary fronts.”

Futures tied to the Nasdaq-100 index dropped 1.2% on Friday. The tech-heavy index ended Thursday up over 3% for the week, following three weeks of declines.

“We haven’t been advocating for a major move out of growth stocks,” said David Stubbs, global head of investment strategy at J.P. Morgan Private Bank. “We’ve seen the permanent adoption of many digital technologies, from this shift from the real world to the digital world. I don’t think that shift will reverse.”

His company is also buying financial and industrial stocks, expecting them to benefit from the recovery because they are economically-sensitive sectors.

The yield on the benchmark 10-year Treasury note rose to 1.614%, before easing to 1.590%. That is still up from 1.525% on Thursday.

“The bigger picture is, vaccines are going to create a sustainable reopening. That is what the market is reacting to,” Mr. Stubbs said. “You’re seeing a rapid reassessment of the macro environment.”

Ahead of the market open, megacap tech stocks including Apple, Microsoft, Alphabet and

Amazon.com

declined. Tesla shed over 3% premarket.

Fresh data on U.S. consumer sentiment will be out at 10 a.m. ET. The University of Michigan’s preliminary reading for March is expected to show an uptick in confidence amid the vaccination rollout and job gains.

Bitcoin climbed to a record high, topping $58,700 in overnight trading. It has since pulled back about 5% to around $55,900.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.4%.

Among European equities,

Burberry

rose over 6% after the luxury goods maker said it expects its revenue and a measure of profit to be above analysts’ expectations for the 2021 fiscal year.

In Asia, most major benchmarks closed higher. The Shanghai Composite Index added 0.5% and Japan’s Nikkei 225 rose 1.7%. Hong Kong’s Hang Seng Index dropped 2.2%.

A banner for South Korea’s Coupang adorned the New York Stock Exchange facade before the company’s IPO on Thursday.



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Courtney Crow/Associated Press

Write to Anna Hirtenstein at [email protected]

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Stock-market futures slip, bond yields pop near 1% amid razor-thin Georgia races


Wall Street had Georgia squarely on its mind Tuesday night, with equity futures and bonds mostly in the crosshairs as investors eyed dual contests for key Senate seats coming down to razor-thin margins in early returns.

MarketWatch’s Victor Reklaitis reported that analysts are describing the Georgia races as “about as close as you can get,” and there are expectations that the winners won’t be declared until Wednesday morning.

At last check, tallies from populous Democratic-leaning counties, particularly in Dekalb, which could swing the vote tally, were looming.

Democratic challenger Jon Ossoff was trailing incumbent Republican Sen. David Perdue, with over 90% of the vote counted, after enjoying a handy lead earlier, according to data aggregated by the Associated Press.

In the other runoff, Democrat Raphael Warnock was also running slightly behind against incumbent GOP Sen. Kelly Loeffler.

The Senate races are runoffs from the November general election, when none of the candidates hit the 50% threshold required to be declared winner.

At stake for the markets is the prospect of a slim Democratic majority in the Senate if candidates can upend GOP incumbents.

Senate Republicans, if either Loeffler or Perdue wins Tuesday night, can be expected to block further coronavirus relief legislation and crimp any Democratic plans for expansive spending after President-elect Joe Biden takes office, experts said.

A Democratic sweep in Georgia, however, would give that party virtual control of that chamber because Vice President–elect Kamala Harris would cast tiebreaking votes as the chamber’s president.

Futures for the S&P 500 index
ESH21,
-0.64%

ES00,
-0.64%

were off 0.7%, while those for the Dow Jones Industrial Average
YMH21,
-0.24%

YM00,
-0.24%

were 0.3% lower, and Nasdaq-100 futures
NQH21,
-1.34%

NQ00,
-1.34%

were off 1.3% late Tuesday.

In the regular session, the Dow
DJIA,
+0.55%
,
S&P 500 index
SPX,
+0.71%

and the Nasdaq Composite Index
COMP,
+0.95%

finished the session solidly higher ahead of the political face-offs.

However, some of the biggest moves were emanating from the bond market, with the 10-year Treasury yield
TMUBMUSD10Y,
1.000%

knocking on the door of 1%, at around 0.985%, as prices fell, after rates finished at 0.955%, marking its highest 3 p.m. Eastern close since Dec. 4, according to Dow Jones Market Data. The 30-year Treasury bond
TMUBMUSD30Y,
1.762%

also was up nearly 4 basis points yielding 1.744% vs. an afternoon close at 1.705%, also its highest rate in a month.

For the bond market, Democratic wins could add to the bearish pressure on Treasurys as analysts say inflation expectations have risen in response as Congress may be more inclined to pass additional fiscal spending measures with a majority, which would weigh on bond prices, dragging yields up.

“It looks like a couple of the larger democratic counties haven’t been totally counted yet so my belief is this may very well swing to the Democrats,” Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities, told MarketWatch.

“If that does happen rates will continue to rise over the next few days. We could very well see 10yr yields near 1.2% shortly,” he wrote.

It is nearly impossible to surmise what outcome Wall Street deems is best suited to push stocks further higher in 2021. Last year, market participants had been wagering that a Biden presidential victory, coupled with Democrats achieving a majority in the Senate, would provide the best scenario for additional financial relief measures to help sustain the economy’s recovery from the Covid-19 pandemic.

However, a blue wave failed to manifest and markets surged into the final weeks of 2020 regardless.



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