U.S. stocks are holding onto cautious early gains ahead of Fed Chairman Jerome Powell confirmation heading on Capitol Hill later this morning.
U.S. equity futures nudged higher Tuesday, following on from the strongest late-session rally for tech stocks in nearly two years, as investors continue to grapple with inflation concerns that are compounded by a worrying surge in global Covid infections.
The Nasdaq rallied hard late Monday, after falling into so-called correction territory, a level defined as a 10% slide from a recent peak, during the trough of yesterday’s session. The tech-focused benchmark finished modestly higher, however, thanks to a near 3% single-day turnaround, the strongest rally since March of 2020.
Similar gains may be difficult to sustain Tuesday, with Federal Reserve Chairman Jerome Powell set to appear before the Senate Banking Committee later this morning and December inflation data looming Wednesday, but the turnaround has nonetheless steadied nerves on Wall Street heading into the start of the third quarter earnings season later this week.
In prepared remarks for his confirmation hearing testimony on Capitol Hill, set to begin at 10:00 am Eastern time, Powell said the country’s post-pandemic recovery will be “different in some respects”, but vowed to “prevent higher inflation from becoming entrenched” in the world’s largest economy.
Omicron’s relentless wave, however, continues to sweep across the country, with daily infections hitting a record 1.35 million yesterday, lifting the seven-day average to around 700,000 — a level last seen in January of 2021 — raising concerns that growth will be difficult to maintain in the face of business closures, travel restrictions and self-isolations.
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Markets are also bracing for what could be at least four rate hikes between now and the end of the year, at least according to JPMorgan (JPM) – Get JPMorgan Chase & Co. Report CEO Jamie Dimon, with the first coming as early as March, a timeline Atlanta Fed President Raphael Bostic said Tuesday would be a “reasonable possibility”.
Still, Wall Street looks set for modest opening bell gains Tuesday, with futures contracts tied to the Dow Jones Industrial Average indicating a 65 point advance and those linked to the S&P 500 priced for a 15 point move to the upside.
Futures tied to the Nasdaq are indicating an 80 point opening bell gain as benchmark 10-year Treasury note yields ease to 1.757% in overnight trading and ahead of tomorrow’s auction of $36 billion in new notes.
Tesla (TSLA) – Get Tesla Inc Report shares were once again a notable pre-market mover, rising firmly over the $1,000 mark, following data from China showing record December sales in the world’s biggest car market and a price target increase from Morgan Stanley.
Pfizer (PFE) – Get Pfizer Inc. Report shares nudged higher, as well, after the drugmaker said it’s developing a hybrid vaccine that protects against Covid’s original strain as well as the newly-emerged Omicron variant.
Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report was the most active pre-market stock, however, rising 2% after analysts at KeyBanc boosted their rating and price target for the chipmaker, citing growth in data center demand and the impact of its $35 billion takeover of Xilinx (XLNX) – Get Xilinx, Inc. Report.
In overseas markets, Europe’s Stoxx 600 was marked 1% higher by mid-day trading in Frankfurt, powered by a follow-on rally in tech stocks and solid gains for defensive sectors such as healthcare, while the region-wide MSCI ex-Japan index in Asia closed out the session with a 0.22% gain.
