On Wall Street, futures on the main US stock indexes continue to remain virtually unchanged, awaiting a new round of quarterly reports and Jerome Powell’s Fed announcement on US rates, the latter expected on February 1st.
Dow Jones futures are virtually unchanged, while S&P 500 and Nasdaq futures are nailed just below par.
The Dow Industrial Average rose 155 points on Friday (+0.47%) to 33,199.71; the S&P 500 gained 48.24 (+1.24%) to 3,947.01. The Nasdaq posted a gain of 213.41 points (+1.96%) to 11,065.32.
On a weekly basis, the Nasdaq outperformed the market, rising 0.55% and posting a third consecutive week of gains; the Dow Jones lost 2.70%, while the S&P 500 lost 0.66%, interrupting the gains of the last two weeks.
Since the beginning of the year, it is the Nasdaq which is in pole position, with an increase of 6.44%.
US markets continue to hang on the lips of the Fed, paying attention to any rumors and news related to the US central bank’s next moves on rates.
Yesterday the Wall Street Journal reported the indiscretion according to which Fed chairman Jerome Powell and the other exponents of the FOMC could also decide to take a break in the spring in the path of monetary tightening launched to defeat inflation.
The rumors, combined with statements made by Fed Governor Christopher Waller – who last Friday said he was in favor of a 25 basis point rate hike at the next FOMC meeting – lead investors to increasingly hope for an imminent end to the restrictive monetary policy made in the USA.
“Markets are increasingly betting that high inflation (in the US) is fast turning away from us and that the period of tight monetary policy is about to end,” said Brian Levitt, global market strategist at Invesco. Although the economy will probably still face some challenges by mid-year, the market is looking ahead to what could prove to be a sustainable recovery” of the US economy.
With regard to the Fed’s next moves, Citi analysts in particular revised downwards their projections on the monetary tightening of the US central bank led by Jerome Powell, scheduled for next Wednesday 1 February, after the two-day meeting of the FOMC, the monetary policy arm of the Federal Reserve.
“We changed our outlook on the February FOMC meeting from a 50 basis point rate hike to +25 basis points, although we believe markets need to continue to factor in the likelihood of a higher tightening.”
Citi changed its outlook on rates precisely with the slowdown in inflation growth.
According to data from the CME Group, the markets are pricing in a 99.7% probability of a 25 basis point monetary tightening by the Fed on February 1, which would bring the cost of US money to the new range including between 4.5% and 4.75%.
About 40% of companies listed on the Dow Jones will release their quarterly reports this week. Among the US corporate giants, keep an eye on the balance sheets of Microsoft, IBM, Tesla, Visa and Mastercard.
In the fixed income market, US Treasury rates are up at 3.504%, while 2-year Treasury rates are flat at around 4.185%.