Wall Street hesitates over more earnings and new economic data
By noon, the Dow Jones Industrial Average had slipped 12 points, still a consistent percentage change, to 35,077, while the S&P 500 and the tech-savvy Nasdaq Composite fell 0.2% and 0 .4%, respectively.
12:05 p.m .: US benchmarks in the red
U.S. stocks were all down at midday on Monday amid jitters about a possible Federal Reserve interest rate hike as early as next month, as investors waited for more earnings and new economic data.
By noon, the Dow Jones Industrial Average had slipped 12 points, still a flat percentage change, to 35,077, while the S&P 500 and the tech-savvy Nasdaq Composite fell 0.2% and 0.4 %, respectively.
“Monday’s trading lacks a bit of the craziness that has characterized the past two weeks, but it will likely only be a lull,” commented Chris Beauchamp, chief market analyst at online trading platform IG.
He noted that statements on interest rates and the inflation outlook from central bank policymakers continue to rattle markets, “and we’re going to face the same thing as the market looks to the next round of meetings of the major central banks”.
“All of this is a far cry from 2021, but reflects the changed circumstances seen in recent months and points to a world of continued high volatility,” he added.
Companies such as Pfizer, Uber, Coca-Cola and Disney are expected to release quarterly earnings reports in the coming days. Meanwhile, the latest US consumer price index is due on Thursday, further underscoring inflationary pressures.
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10 a.m.: mixed US indices at the opening
U.S. benchmarks started mixed on Monday ahead of a busy week of corporate earnings and new economic data on inflation.
The Dow Jones Industrial Average lost 2 points, a consistent percentage change, to 35,087, while the tech-laden Nasdaq Composite and the broader S&P 500 gained 0.9% and 0.3%, respectively.
“As we enter a new week, the dominant theme in the market is the same and will remain so for some time,” said Craig Erlam, Senior Market Analyst, UK and EMEA, OANDA. “The past two weeks have only increased that as central banks kicked into high gear and markets continued to price in ever-deeper tightening.”
Erlam noted that one thing that will help on this front is an easing of inflationary pressures or at least an indication of what is happening.
“This week’s inflation data is unlikely to provide that and we’re probably months away from the peak,” he said. “So while it will bring some anxiety if we see numbers above estimates again, it’s things like surveys that could give hope that we’re on a better trajectory.”
6:30 a.m.: Stocks set to open lower
U.S. stocks are set to pull back at the start of a new week as investors continue to digest the stronger-than-expected January payrolls report from Friday and eye more earnings from big companies, including Hasbro (NASDAQ:HAS).
Futures on the Dow Jones Industrial Average fell 0.2% on Monday, while those on the S&P 500 index lost 0.3% and futures on the tech-laden Nasdaq-100 fell 0.2%. lost 0.2%.
Friday’s jobs report brought traders’ attention back to the Federal Reserve’s monetary policy, which is expected to tighten as early as next month as the US economy continues to recover.
Neil Wilson, chief market analyst for Markets.com, noted, “Wages have risen significantly, job growth is much better than expected; a reading that gives the Fed carte blanche to raise 50 bps base in March if she wants to. Also, there have been huge revisions from the previous months.
“Indeed, the market is now pricing about a one-in-three chance that the Fed will raise its policy rate by 50 basis points next month, swaps show the market is pricing in three 25 basis point hikes by the end of June. “
Equities have had a volatile start to the year, amplified last week by extreme moves in tech stocks. Shares of Facebook owner Meta Platforms fell on a record low following earnings disappointment, while shares of Amazon.com posted their biggest gain since 2015 after its latest quarterly results.
The earnings season will continue today, with meat processing giant Tyson Foods Inc (NYSE:TSN) and toymaker Hasbro Inc (NASDAQ:HAS) expected to report before the opening bell. Earnings expected later this week include Pfizer and KKR on Tuesday, Uber Technologies and Walt Disney on Wednesday, and Coca-Cola, PepsiCo and Twitter on Thursday.
Meanwhile, shares of Peloton soared in premarket trading on Monday after The Wall Street Journal reported that the stationary bike company was attracting interest from Amazon and other potential suitors.
Cryptocurrencies gained on Monday, with bitcoin rising 5% after topping $40,000 on Friday after spending two weeks below that level
But oil prices fell amid signs of progress in Iran nuclear talks. Late last week, the US government lifted some sanctions aimed at reviving the 2015 nuclear deal. This could mean restrictions on Iran’s oil industry are lifted, bringing new supply to market, according to the analysts.