Before The Bell
The U.S. stock market seems positioned to start 2022 on a high note. The S&P 500 futures are currently ahead by about 25 points, which indicates an upside move at the opening bell. Investors seem optimistic, despite the relatively difficult environment. Coronavirus cases continue to spread across the country at a rapid pace, and it remains to be seen how the surge might impact the economy. In addition, inflation is still a problem, and further pandemic-related supply chain disruptions probably won’t help matters. Moreover, these challenges could put the Federal Reserve in an uncomfortable position as it looks to tighten monetary policy in the months ahead.
In the economic arena, there will be few reports released this morning. The construction spending figures for the month of November will be the main area of focus for the day, while tomorrow, the Institute for Supply Management (ISM) will update its manufacturing index for December. The important news, however, will come at the end of the week, as the government is slated to deliver the December employment numbers on Friday. Analysts currently expect that about 400,000 nonfarm payroll jobs were added to the economy last month, up sharply from the 210,000 figure logged in November. Meanwhile, the unemployment rate is forecast to come down to the 4.1% mark, representing a slight improvement over the prior figure. It should be noted that the monthly employment report has the potential to move the market, and some traders may be positioning their portfolios in the days leading up to the release.
On the corporate front, not too many companies are scheduled to post their financial reports today. However, later in the week we will hear from Walgreens Boots Alliance (WBA). Shares of the company, a drugstore retailer, are represented in the Dow Jones Industrial Average, so this issuance may be of importance. In addition, Constellation Brands (STZ), a leading alcohol beverage manufacturer and distributor, will weigh in with its numbers.
Technically, equities made respectable progress during the month of December, finishing off a strong 2021. Looking ahead, it remains to be seen if the bulls can remain in control of the market. Many investors believe that stocks tend to rise in January, in a phenomenon known as the January Effect. In theory, market gains at the start of the year could be the result of investors deploying fresh capital into stocks and making strategic portfolio decisions.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
