Before The Bell
The U.S. stock market seems poised for a mixed start today, as some traders look to extend the gains achieved last week. Specifically, the S&P futures are currently up about five points, which is in our view a positive indication. Sentiment seems supportive, at least for now. Nonetheless, there are some obvious challenges that investors will eventually have to contend with. Specifically, the Omicron variant, although not as severe as initially feared, still remains a health concern. In addition, inflationary pressures seem to be mounting, and the Federal Reserve may have to take a less accommodating stance.
In the economic arena, there are no major reports due to be released today. However, tomorrow, the Producer Price Index (PPI) for the month of November will be published. Traders will likely be paying some attention to that issuance, especially given that last week the Consumer Price Index (CPI) registered an elevated reading. Though many investors seem to have internalized the fact that inflation is now a challenge, there is nonetheless still the chance that the problem will moderate as the labor markets improve and supply-chain disruptions ease. Meanwhile, on Wednesday afternoon, the Federal Open Market Committee will conclude its two-day policy meeting, and is slated to issue an interest-rate decision and provide some prepared comments. Federal Reserve Chairman Jerome Powell has suggested that the central bank plans to gradually reduce the asset purchase program that was place to support the economy through the pandemic.
In corporate news, there are not too many corporate profit reports scheduled for this week. However, on Thursday, Adobe (ADBE), a leading software company, will weigh in with its numbers, as will FedEx (FDX). Given FedEx’s role in the broader transportation sector, Wall Street will likely be looking carefully at this issuance.
Technically, the stock market staged a sizable advance last week, and has largely recovered from last month’s selloff. The S&P 500 Index is now sitting near high ground, and it remains to be seen if traders can push stocks higher from here without additional consolidation. It should be noted that there has been some sector rotation taking place lately, with many of the speculative technology issues that had been popular coming under pressure as traders deployed capital into more traditional names. This may ultimately prove to be a healthy development.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
