As we get closer to the start of today’s trading session, stock futures are pointing to a positive open for U.S. equities. Overnight, markets in Asia closed mostly to the upside. Meanwhile, the major European indexes are up. Elsewhere, oil prices have continued to move higher, with West Texas Intermediate (WTI) up 0.8%, to around $81 a barrel.
Corporate and consumer budgets are potentially facing more inflationary pressures, after OPEC (the Organization of the Petroleum Exporting Countries) and its allies announced that they were cutting daily petroleum output by 1.16 million barrels per day. WTI crude jumped by 6.3%, to $80.42 a barrel, marking its largest single day advance in nearly a year. Saudi Arabia referred to the cuts, which will be in effect from May through the end of the year, as a precautionary measure aimed at providing some stability to the oil markets. Additionally, Russia is reportedly trimming its output by some 500,000 barrels per day for the rest of the year.
Just last month, WTI prices had fallen to their lowest levels since December of 2021, as the turmoil in the banking sector raised concerns that the global economy would take a hit. This latest development makes the Federal Reserve’s job even tougher. Last Friday’s Personal Consumption Expenditures (PCE) price index report provided further evidence that the central bank was making headway against inflation. Specifically, the PCE for February showed a 5% increase versus the year before, as compared with a 5.4% advance the month before. However, as energy makes up a big chunk of the PCE, price increases may register an uptick in the months ahead.
The economic calendar for the rest of the week should provide some additional data points that will likely figure into the Fed’s rate decision at its next meeting, scheduled for the first week in May.
This morning, we get February’s figures for factory orders and job openings, both of which are expected to show modest decreases from January’s tallies. Tomorrow, the Institute for Supply Management (ISM) releases its March report on the services sector. Consensus is calling for activity to show further expansion, though at a slightly more moderate pace than in February. Lastly, Friday brings the U.S. employment report for March, where the average forecast is calling for about 235,000 added, down from 311,000 the month before.
Wrapping up Monday’s market action, the Dow Jones Industrials climbed 327 points, or 1.0%, the S&P 500 gained 15 points (0.4%), while the tech-heavy NASDAQ fell 32 points, or 0.3%.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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