U.S. stock futures start week with advance after latest relapse

By Jamie Chisholm

US stock futures suggested Wall Street bounced off five-week lows as Treasury yields eased.

How are stock index futures traded?

On Friday, the Dow Jones Industrial Average fell 337 points, or 1.02%, to 32817, the S&P 500 fell 42 points, or 1.05%, to 3970, and the Nasdaq Composite fell 195 points, or 1.69%, to 11395.

What moves the markets

Buyers set the stage early Monday, delivering small gains for stock index futures. The beginning rally comes after US stocks fell to a five-week low amid signs that relatively resilient economic activity is helping to keep inflation stubbornly high.

“The US economy is proving to be much more resilient than many market participants expected just a few months ago,” said Stephen Innes, Managing Partner at SPI Asset Management.

The PCE inflation gauge released on Friday showed that price pressures remain elevated, reducing the likelihood that the Federal Reserve will consider easing monetary policy in the near term, thereby forcing bond yields higher.

“The US yield reset is rolling through global risk markets as a combination of hot inflation, better growth sentiment and tightening policy pushes most investors to bunker while others see the relative safety of the still highly valued US dollar looking,” Innes added.

US economic updates to be released Monday include January durable goods orders at 8:30 a.m. ET and pending home sales in January at 10 a.m. ET. Fed Governor Phillip Jefferson will speak at 10:30 am

The S&P 500 is down 4% over the past three weeks as the policy-sensitive 2-year Treasury yield surged over 4.8%, near 15-year highs. However, Monday’s yields are a little weaker, which supports stock sentiment as the new week begins.

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Still, Jonathan Krinsky, Chief Technical Strategist at BTIG, is skeptical of further downside for equities.

“Although the holidays were shortened, the SPX suffered its worst decline of the year (-2.67%) last week as momentum continues to build. As a result, it essentially tested its 200-day moving average (3940) and hit the volume zone high (3925-3950) of recent years. While these areas are likely to provide some near-term support, we anticipate an eventual breakdown below them, which would open the door to December lows (3775),” Krinsky wrote in a client note.

-Jamie Chisholm


(ENDS) Dow Jones Newswires

02/27/23 0655ET

Copyright (c) 2023 Dow Jones & Company, Inc.


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