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Market Snapshot: Stock futures lower ahead of testimony by Fed’s Powell on economy

Market Snapshot: Stock futures lower ahead of testimony by Fed’s Powell on economy

2021-02-23 12:26:00
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Stock index futures tended to be lower on Tuesday, with tech stocks continuing to lead the way down as investors tracked a sharp rise in bond yields and prepared for testimony from Federal Reserve Chairman Jerome Powell on the economic outlook.

What do the main benchmarks do?
  • Futures on the Dow Jones Industrial Average
    YM00,
    + 0.04%

    17 points, or 0.1%, up to 31,483.

  • S&P 500 Futures
    ES00,
    -0.38%

    were 14.85 points or 0.4% lower at 3,858.75.

  • Nasdaq-100 Futures
    NQ00,
    -1.40%

    gave up 185.75 points, or 1.4%, to trade at 13,038.50.

Big losses for tech stocks left the Nasdaq
COMP,
-2.46%

sharply lower on Monday, down more than 2%, while also weighing in on the S&P 500
SPX,
-0.77%

The S&P 500 suffered its fifth straight loss, the index's longest series of losses since a seven-day slip that ended last February 28.
DJIA,
+ 0.09%

meanwhile, benefited from a spin to more cyclical stocks, returning 27.37 points or 0.1%.

What drives the market?

A surge in government bond yields has caught investors' attention, creating spelling problems for techies and other previous high-flyers. Higher returns make it more difficult to justify overvaluation. Meanwhile, stocks of companies more dependent on the economic cycle have benefited, buoyed by expectations of picking up growth as the economy fully reopens thanks to aggressive fiscal stimulus, the introduction of vaccines and falling COVID-19 cases.

Powell, at 10 a.m. Eastern, begins the first of two days of congressional testimony. Investors will be happy to hear Powell's comments on the rise in bond yields and inflation expectations, although the Fed head has previously emphasized the central bank's determination to hold off on withdrawing monetary stimulus until inflation reaches its target. of 2%.

Powell "will make or break the day for investors," said Ipek Ozkardeskaya, senior analyst at Swissquote. Powell is likely to repeat the Fed's support for financial markets and the economy until substantial progress is made in improving the job market, but he will also certainly be questioned about rising inflation expectations, especially after the surge in the producer price index. month. .

"So the investors' mood will essentially depend on Powell's belief to maintain his ultra-free monetary policy and the feasibility of continuing with such a soft hand under the current market conditions," Ozkardeskaya said.

On the fiscal front, the House Budget Committee on Monday approved a $ 1.92 trillion bill for the implementation of President Joe Biden's coronavirus relief plan, a first step toward a likely passage of the house by the end of the week . While the final package is likely to shrink, analysts do not expect the final price tag to come far below Biden's $ 1.9 trillion proposal.

Bitcoin
BTCUSD,
-15.39%

continued to plummet from its all-time high above $ 50,000 after Treasury Secretary Janet Yellen on Monday called the cryptocurrency an "extremely inefficient" way to execute transactions.

Read: A tangled market web of Tesla-bitcoin-ARK Investment could put investors in trouble, strategist warns

A round of housing data for December is available, with the S&P CoreLogic Case-Shiller house price index and the FHFA house price index both at 9 a.m. A consumer confidence index is scheduled for release at 10 a.m.

Which companies is the focus on?
  • Shares of electric vehicle manufacturer Tesla Inc.
    TSLA,
    -8.55%

    declined more than 4% in premarket activity while bitcoin fell sharply. Tesla revealed earlier this month that it had purchased $ 1.5 billion worth of cryptocurrency.

  • From Palo Alto Networks Inc.
    PANW,
    -3.16%

    Shares fell more than 2% after the cybersecurity firm's quarterly earnings outlook fell short of the Wall Street consensus late Monday, while surpassing estimates for the previous quarter.

  • Home Depot Inc.
    HD,
    -1.36%

    stocks fell even after the home improvement retail giant reported fourth-quarter earnings and revenues that exceeded expectations and increased its dividend by 10%.

  • Software-as-a-service company ZoomInfo Technologies Inc.
    ZI,
    -6.25%

    announced its fiscal fourth quarter results that exceeded expectations late Monday. Shares were up more than 8% in premarket business.

  • Shares of From RealReal Inc.
    FOR REAL,
    + 1.38%

    declined more than 10% after the e-commerce retailer of second-hand luxury goods suffered a larger quarterly loss late Monday, saying the pandemic had "temporarily" disrupted the path to profitability.

What are other markets doing?
  • The return on the 10-year treasury
    TMUBMUSD10Y,
    1,363%

    continued its rise, up 1.5 basis points to 1.371%. Yields and bond prices move in opposite directions.

  • The ICE U.S. Dollar Index
    DXY,
    + 0.11%

    a measure of the currency against a basket of six major rivals, rose 0.1%.

  • Oil futures extended their gains, with the US benchmark
    CL.1,
    + 0.60%

    Rised 0.8% to trade above $ 62 a barrel. Gold futures for April
    GCJ21,
    + 0.09%

    rose 0.1% near $ 1,810 an ounce.

  • In foreign trade in shares, the pan-European Stoxx is 600
    SXXP,
    -0.81%

    fell 0.9% and the FTSE 100 in London
    UKX,
    -0.23%

    was 0.3% discount. The Shanghai Composite
    SHCOMP,
    -0.17%

    fell 0.2%, while the Hang Seng Index of Hong Kong
    HSI,
    + 1.03%

    1% up.

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