The U.S. stock market seems poised for a constructive start this morning, as a new week on Wall Street commences. The broader equity futures are now ahead about 14 points, which suggests some strength at the beginning of the session. Investors will likely be spending the next few days sifting through the latest corporate profit releases, while also keeping a close eye on the most recent inflation numbers.
In the economic arena, there are no major reports scheduled for today. Tomorrow, however, the trade balance for the month of December will be released, which should receive some attention from investors, and later in the week, the Consumer Price Index (CPI) for January will be published; investors will likely be looking to this report to see if price pressures are intensifying. Of note, the Federal Reserve seems committed to providing a stable price environment and has indicated that it intends to lift interest rates to curb inflation. Analysts currently expect a series of rate hikes to be implemented this year, possibly starting in March. Although few economists dismiss the nation’s inflation problems as transitory in nature, it is still possible that a stronger labor market will help ease supply-chain problems and bring about some improvement. The central bank, which has been taking a balanced approach, will clearly be watching the situation.
Meanwhile, the fourth-quarter earnings season continues to unfold, with a number of widely-held companies posting results this week. This morning, we heard from Hasbro (HAS), which is pulling ahead in pre-market trading, and tomorrow, Pfizer (PFE) and Chipotle Mexican Grill (CMG) will deliver their numbers. Although many corporations have delivered respectable reports, investors have grown more exacting given the current climate.
Over the past several sessions, the broader S&P 500 Index has moved back above its 200-day moving average, located around the 4,440 mark. Many technicians view this development as a bullish signal, but it remains to be seen if the market can move higher in the coming days. Of note, there has been a good deal of sector rotation lately, with energy and financial names attracting much attention. It is unclear if these more conservative equities will lead the market higher, or if traders will gradually return to more dynamic technology stocks.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
