US futures hover near record highs as investors nervously await key US inflation data

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Wall Street awaited US inflation data on Tuesday.

Futures contracts for the major US stock indices were mixed on Tuesday, hovering near record highs as investors awaited key inflation data from the world’s biggest economy.

S&P 500 futures were edged 0.05% higher after the index finished 0.02% lower on Monday, taking it narrowly below Friday’s all-time high. Dow Jones futures rose 0.1% and Nasdaq 100 futures were roughly flat.

Asian stocks moved broadly higher overnight after data showed Chinese imports and exports rebounded in March. Japan’s Nikkei 225 rose 0.72%, but China’s CSI 300 index slipped 0.16% as a spike in yields on the debt of a major asset manager unnerved investors.

In Europe, the continent-wide Stoxx 600 index rose 0.25%. The UK’s FTSE 100 slipped 0.04% despite data showing the country’s GDP rose 0.4% in February.

Meanwhile, bitcoin soared to an all time high of above $62,000 ahead of crypto exchange Coinbase’s IPO, with renewed institutional interest powering the latest leg higher.

The main event on investors’ radar on Tuesday will be US consumer price index inflation data, due at 8.30 a.m. ET.

Predictions of higher growth and inflation have already caused a spike in bond yields, which have in turn weighed on the fast-growing parts of the stock market like technology shares, which look relatively less attractive when yields rise.

Analysts expect Tuesday’s data to show US CPI inflation rose to 2.5% in March from 1.7% in February.

Inflation “has emerged as a key focal point for markets given the debates surrounding inflation and its implications for monetary policy moving forward,” strategist Jim Reid at Deutsche Bank said.

“Indeed, part of the reason that markets have brought forward their expectations for Fed rate hikes is based around rising inflation expectations that they think the Fed might have to rein in.”

Karen Ward, JPMorgan Asset Management’s chief European strategist, has said she thinks inflation could average 3% over the next 10 years, thanks in part to huge amounts of pent-up savings.

However, Goldman Sachs chief economist Jan Hatzius predicted in a note that underlying US inflation would remain “well below the Fed’s 2% target, consistent with an economy that remains well below full employment.”

Bond yields climbed on Tuesday morning, with the yield on the key 10-year US Treasury note rising 1.5 basis points to 1.691%. Yields move inversely to prices.

Investors will also be keeping an eye on 30-year US Treasury auctions, after 3- and 10-year sales attracted solid demand.

Oil prices edged higher, with Brent crude up 0.4% to $63.54 a barrel and WTI crude 0.3% higher to $59.87 a barrel.

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Stocks slip from records as optimism over economic recovery pauses

Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City
Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City

All three major US indexes ended lower to start the week as investors take a breather from the economic recovery-fueled optimism that sent stocks to record highs on Friday.

Wall Street is now awaiting earnings later this week and key inflation data that’s due Tuesday. Economists polled by Reuters expect the consumer price inflation index to jump 2.5% from 1.7% year on year in February. But there’s a risk that the Fed and economists are unprepared for the magnitude of economic growth and inflation, according to Bank of America.

Semiconductor stocks swerved Monday,with Intel and AMD each falling about 4% after Nvidia announced plans to manufacture its own CPU processor. The news sent shares of Nvidia surging by as much as 4%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:

Canaccord Genuity upgraded Tesla to a “buy” rating on Monday, with analyst Jed Dorsheimer explaining that Tesla’s budding energy storage business has long-term potential. Tesla jumped as high as 3.9%.

Veteran investor Danny Moses compared the stock-market boom to the dot-com bubble, underscored the dangers of excessive leverage and liquidity, and called for the Federal Reserve to temper its stimulus efforts in a recent interview. Here are his 16 best quotes.

Bitcoin rose as much as 2.6% to $61,229 as the crypto world prepares for Coinbase’s direct listing on Wednesday. The surge took the coin close to its all-time high of $61,742 reached on March 1.

West Texas Intermediate crude climbed 0.7%, to $59.71 per barrel. Brent crude, oil’s international benchmark, rose 0.5% to $63.30 a barrel.

Gold slipped 0.8%, to $1,731.70 per ounce.

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US stocks retreat from records as investors mull economic-recovery progress and new Powell comments

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell arrives to speak to reportersin Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque

US stocks slipped from record highs as investors digest Federal Reserve Chairman Jerome Powell’s recent comments and prepare for a busy week ahead for economic data and earnings.

In an interview with CBS, which aired on Sunday, Powell said that the US is at an “inflection point” and is likely to see a boom in growth and hiring, but still faces threats from COVID-19.

“The outlook has brightened substantially,” he told CBS’s “60 minutes.” Yet he said there was a risk that coronavirus starts spreading again.

He also discussed the outlook for a digital dollar, and said the the US central bank is working hard on researching one as nervousness grows in some quarters about China’s rapid development of its own digital currency.

As the economy continues to recover from the pandemic, investors are focused in on inflation data that is due Tuesday. Economists polled by Reuters expect the consumer price inflation index to jump 2.5% from 1.7% year on year in February.

On the earnings front, Wall Street behemoths Goldman Sachs, JPMorgan, and Wells Fargo are due to report on Wednesday.

Here’s where US indexes stood at the 9:30 a.m. ET open on Monday:

Bitcoin rose as much as 2.6% to $61,229 as the crypto world prepares for Coinbase’s direct listing on Wednesday. The surge took the coin close to its all-time high of $61,742 reached on March 1.

West Texas Intermediate crude climbed 1.7%, to $60.31 per barrel. Brent crude, oil’s international benchmark, rose 1.6% to $63.97 a barrel.

Gold slipped 0.5%, to $1,737 per ounce.

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3 reasons why volatility could come roaring back to a stock market that’s drifting along near record highs, according to UBS

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Traders at the New York Stock Exchange.

  • A key tracker of stock-market volatility at its lowest since early 2020 at the same time that US stocks are at record highs.
  • Investors should anticipate Wall Street’s so-called “fear gauge”, or VIX, to come off those lows in the coming months, said UBS.
  • Volatility may pick up pace as investors wrestle with inflation worries and COVID-19 variants.
  • See more stories on Insider’s business page.

Wall Street’s key measure of stock-market volatility is at its lowest since the COVID-19 crisis took off in the US last year, but that calmness will likely break over the next few months, according to UBS.

The US stock market has soared to record highs in 2021 on the back of accelerating coronavirus vaccinations worldwide and roughly $5 trillion in financial aid deployed by the US government to mitigate the pandemic’s economic damage. The vaccinations and stimulus packages have been laying the groundwork for a further reopening of the world’s largest economy as people begin to rebuild work and school routines and spend the money sent to them by Uncle Sam.

The S&P 500 index has shot above the 4,100 level and the Dow Jones Industrial Average tracking blue-chips is at its strongest levels, driven by cyclical sectors such as energy and industrials that stand to benefit from increased economic activity.

Wall Street’s so-called “fear gauge,” at the same time, has dropped below the 17 level, the lowest since early February 2020, before the World Health Organization declared the coronavirus outbreak a pandemic. But don’t expect the Cboe volatility index to continue to stay that low, said the world’s largest wealth manager in a note published Friday.

UBS noted a news report that at least one investor bought about $40 million in VIX call options that indicate the buyer expects market volatility to pick up pace over the next three months. One or more investors anticipated the VIX to reach above the 25 level and rise towards 40 by mid-July, Reuters reported, citing trading data.

“We see reasons to expect periodic bouts of higher volatility in the near term,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in the note.

Growth vs inflation

Firstly, investors may be torn between optimism over accelerating economic growth and worries over higher inflation. Among the signs that recovery is taking further hold was the recent and strongest reading in services-sector activity since 1997 from the Institute for Supply Management. European growth should also strengthen as vaccinations increase.

“Still, as pent-up demand meets supply constraints, a pickup in inflation could well unsettle investors,” said the investment bank. This week, Dallas Federal Reserve President Robert Kaplan said inflation could rise “well in excess of 2.5%,” over the summer, which would be well above the Fed’s 2% target.

COVID-19 strains

Investors have so far looked through news about variant strains of COVID-19. “This optimism could be put to the test by the spread of new variants of the virus, especially in areas where the vaccination effort has been progressing well, such as in the US.”

UBS noted “pockets” of rising infections in Ohio and Wisconsin.

Trading activity

Volatility has been “sporadically heightened” by a rise in institutional and retail activity in the options market, along with the increased share of growth stocks in major equity indexes, said UBS.

“In the first quarter we saw retail activity driving volatility in individual stocks, such as GameStop, which spilled over into broader market swings,” said Haefele.

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US stocks mixed as higher-than-expected inflation data spurs concern over reopening

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US stocks were mixed on Friday following the release of producer price index data for the month of March, which showed a jump of 1%, and a year-over-year increase of 4.2%.

The higher-than-expected inflation data sparked a rally in interest rates, with the 10-Year US Treasury yield rising five basis points to 1.68%. The jump in interest rates led to a swift decline in the tech-heavy Nasdaq 100.

A spike in inflation has been a key concern for investors as the US economy begins to reopen, as some worry that a runaway inflation scenario could materialize when considering the trillions of dollars in stimulus unleashed on the economy since the beginning of the COVID-19 pandemic.

Here’s where US indexes stood at the 9:30 a.m. ET open on Friday:

More details are emerging from the epic blow-up of Bill Hwang’s Archegos Capital family office, which reportedly lost $20 billion in just two days.

Auction house Christie’s continues to set its eyes on the budding NFT industry. The firm said it is planning to auction off a set of 9 CryptoPunk NFTs for up to $9 million next month.

Beyond Meat could soon be joined by another alternative meat company in the public markets, with Impossible Foods exploring an IPO at a $10 billion valuation. Beyond Meat is currently worth about $8 billion.

A surge in bitcoin trading volumes is spurring Coinbase rival Kraken to explore going public next year. Coinbase is set to direct list its shares on April 14.

Oil prices were lower. West Texas Intermediate crude fell 0.08%, to $59.53 per barrel. Brent crude, oil’s international benchmark, dropped by 0.3%, to $63 per barrel.

Gold fell 1.2%, to $1,735.90 per ounce.

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Biden’s tax hike could drag S&P 500 profit growth to a near-standstill next year, says Goldman’s chief US stock strategist

Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) from Getty Images

Corporate tax hikes out of Washington could put a dent in the S&P 500‘s earnings growth in 2022, Goldman Sach’s David Kostin told CNBC on Thursday.

The chief US equity strategist said that if the entirety of President Biden’s plan is passed, which includes raising the corporate tax rate to 28% from 21% and cracking down on companies that move profits offshore, the S&P 500 would see earnings growth of about 2% in 2022.

That’s lower than the 22% quarterly profit growth in the first quarter of 2021, and the 6% profit growth in 2020, according to Bloomberg data.

However, Kostin’s team is pricing in that only parts of the plan will pass and taxes may only be increased to about 25%. In that scenario, the S&P 500 could see 9% earnings growth next year.

He added that if the current tax law was applied for 2022, earnings growth would be around 12% in 2022.

“2%, 9%, 12%. Somewhere in that range is likely to be where the earnings growth ends up being for the market in 2022,” Kostin said. “And make no mistake about it, all of the conversations with clients right now are about the prospect for profits in 2022.”

The chief strategist added that it may be too early to trade based on the tax proposals, as specifics around the plan haven’t been sorted out by the legislature.

Goldman has a year end price target of 4,300 for the S&P 500, a roughly 5% gain from current levels.

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Big-money investors have dumped stocks for 4 straight weeks, even as major indexes hover near record highs

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US stocks have hit record highs in the past weeks – with the S&P 500 breaching 4,000 for the first time – as President Biden’s unprecedented stimulus plan has spurred renewed economic optimism.

Yet Bank of America revealed in a recent note that its institutional clients have been net sellers of shares over the past four weeks.

Communication-services stocks have been at the center of the trend, seeing several weeks of near-record outflows from all BofA client funds as the 10-year Treasury yield has climbed to more than one-year highs. The sector does, however, remain overweighted by actively managed funds.

Only two sectors saw inflows from BofA client portfolios overall: industrials and materials.

Meanwhile, private clients were buyers for the sixth week, though inflows have recently decelerated.

Buybacks by corporate clients have also slowed. The bank did note that the resurgence in buybacks in the first quarter could imply a new record for S&P 500 gross buybacks in 2021.

As for exchange-traded funds, the bank saw big buyers of equity ETFs year-to-date, especially broad market ETFs, which have seen inflows slow down every week for a month.

Growth ETFs saw outflows for the first time in four weeks.

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S&P 500 hits record amid higher-than-expected jobless claims and continued Fed support

Traders work on the floor of the New York Stock Exchange (NYSE) on December 07, 2018 in New York City
Traders work on the floor of the New York Stock Exchange .

  • The S&P 500 stretched further in record highs Thursday as the Federal Reserve signaled it will accommodate conditions for economic growth.
  • Technology stocks tracked on the Nasdaq Composite led gainers.
  • Jobless claims rose to 744,000, pointing to persistently high unemployment levels.
  • See more stories on Insider’s business page.

US stocks hung around record highs Thursday, with the S&P 500 hitting a new high after insight from the Federal Reserve indicated that monetary policy makers will maintain their stance in supporting growth in the world’s largest economy as it continues to recover from the COVID-19 pandemic.

The S&P 500 index pushed further into record-high territory after reaching a closing peak in the previous session. Technology stocks marched up but blue-chip stocks tracked on the Dow Jones Industrial Average tilted slightly lower.

Stock futures ahead of the open showed little reaction to the Labor Department’s report that weekly jobless claims rose to 744,000, higher than the 680,000 claims expected by economists surveyed by Bloomberg. The report indicated that unemployment remains at persistently high levels, with the previous week’s reading upwardly revised to 728,000 from 719,000.

Here’s where US indexes stood at 9:30 a.m. on Thursday:

Members of the Fed’s rate-setting board expect “it would likely be some time until substantial further progress” on reaching targets of maximum employment and above-2% inflation, according to the minutes from the Federal Reserve Open Market Committee’s mid-March meeting released Wednesday.

“FOMC members were quite positive on short-term growth prospects, but made quite clear that short-term acceleration only goes so far towards their long-term “full employment” goal, suggesting even if growth remains robust through 2Q 2021, we’ll still be in a waiting pattern for Fed policy,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, told Insider in emailed comments.

“On balance, there was nothing material in the minutes which changes my view of a reduction in [quantitative easing] beginning in early-2022 followed by a potential first rate hike in late-2022,” said LeBas. “I view a 2022 QE reduction as much more likely than a 2022 rate hike,” he said. “If anything, the first hike will be later and the path of hikes steeper than what the markets have currently priced.”

Around the markets, GameStop shares rose after the video game retailer said it plans to elect Reddit favorite Ryan Cohen as chairman.

Trading app Robinhood reportedly failed to disclose data on certain stock trades for more than a year.

Billionaire tech investor Peter Thiel warned bitcoin might serve as a Chinese financial weapon against the US – and says it threatens the dollar.

Gold rose 0.6% to $1,753.20 per ounce. Long-dated US Treasury yields fell, with the 10-year yield down at 1.647%.

Oil prices were mixed. West Texas Intermediate crude lost 1% to trade at $59.23 per barrel. Brent crude, oil’s international benchmark, dropped 0.6%, to $62.76 per barrel.

Bitcoin rose 2.1% to $57,546.

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US stocks mixed as Fed minutes show policies will remain unchanged

Trader
Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2020 in New York City

  • US stocks were mixed on Wednesday after Federal Reserve officials agreed to keep policies in place.
  • While most officials saw developments, they wanted some time to be more convinced of progress.
  • The stimulus package of President Biden forced the Fed to lift its growth and inflation forecast in March.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell

US stocks were mixed Wednesday after Federal Reserve officials agreed to keep policies in place – sticking to near-zero interest rates and monthly bond purchases – during the last meeting of the Federal Open Market Committee in March, even as the economy showed clear signs of a rebound.

Officials, according to the minutes released Wednesday afternoon, indicated that policies will not change simply on forecasts alone. While most of the 18 officials saw developments, they wanted some time to be more convinced of progress, such as stronger employment.

“While generally acknowledging that the medium-term outlook for real GDP growth and employment had improved, participants continued to see the uncertainty surrounding that outlook as elevated,” the minutes said.

The landmark $1.9 trillion stimulus package from President Joe Biden in early March has forced Fed officials to lift their growth and inflation forecast before the meeting.

“The big message from the Fed minutes is that the central bank is as unconcerned in private about inflation as it is in public,” Brad McMillan, chief investment officer for Commonwealth Financial Network, told Insider. “There appears to be no hidden interest in higher rates, suggesting that rates will indeed remain low until unemployment drops down to pre-pandemic levels.”

The US economy has rebounded faster than what most have expected due in large part to President Joe Biden’s landmark $1.9 trillion stimulus package paired with steady vaccine rollout throughout the country, which has helped the labor, manufacturing, and travel sectors recover. The President on Tuesday moved up the timeline for all American adults to be eligible for a COVID-19 vaccine to April 19 from May 1.

The 10-year Treasury yield has held steady at 1.67% after climbing to the highest levels in over a year in March.

“The fact that the bond yields barely changed last week despite a raft of strong economic numbers … indicates that market has already gone a long way to pricing in the economic rebound,” Kathy Jones, Charles Schwab chief fixed income strategist, said in a note. “Also, it is hard to see U.S. yields surge from here since they are so far above those in many other developed markets in both real and nominal terms. With the current wide yield spread, foreign investors should find U.S. yields attractive.”

Mike Owens, sales trader at Saxo Markets, also said the Fed minutes might give better insight on how members envision the economic recovery and when they expect to hike rates.

“If 5-year US Treasury yields break above 1%, they might provoke a squeeze that could send 10-year yields on a fast track to 2%,” he said.

US shares closed lower Tuesday, with the Dow Jones Industrial Average and S&P 500 retreating from record highs reached the previous session. New sell-offs linked to the Archegos Management Capital crisis added to unease in markets even after US data revealed the economic rebound is on track.

Here’s where US indexes stood after the 4:00 p.m. ET close on Wednesday:

Mobile-gaming company AppLovin is targeting a $30 billion valuation for its US initial public offering, with plans to raise as much as $2.13 billion, Reuters first reported. AppLovin, backed by private equity firm KKR, is looking to sell 25 million shares between $75 to $85 each.

The Singapore-based ride-hailing and delivery giant Grab is reportedly set to list in the US via a SPAC merger with Altimeter Growth Corp. The deal values the combined entity at $35 billion, according to The Financial Times.

Oil prices climbed on optimistic economic data.

West Texas Intermediate crude rose by 0.39% to $59.56 per barrel. Brent crude, oil’s international benchmark, was also up 0.38% to $62.98 per barrel. Oil prices dropped earlier in the week when the Organization of the Petroleum Exporting Countries, or OPEC, said that it will add about two million barrels of oil each day to the market from May to July, easing production cuts.

Bitcoin slipped 4.19% to $55,757.76 as the rally stalls. Sellers outweighed buyers of bitcoin, and the selling spilled over to other cryptocurrencies. Last week, bitcoin flirted with the $60,000-level.

Investor participation in the world’s most popular cryptocurrency soared in the first quarter of 2021 with most of the growth coming from retail investors, according to research from CoinDesk.

Coinbase revenue soared more than 800% year-on-year in the first quarter of this year, the company revealed on Tuesday. This led DA Davidson to reiterate its Buy rating on the company and increase its price target by 125% to $440. Its previous price target for Coinbase was set at $195. Coinbase is set to directly list on the Nasdaq exchange on April 14.

Gold rose to 0.47% to $1,736.50 per ounce.

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US stocks decline as investors digest volatility from Archegos meltdown

NYSE Trader
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020.

US stocks ended lower on Tuesday, with the the Dow Jones Industrial Average and S&P 500 retreating from record highs reached the previous day.

New trades linked to Archegos added unease to markets after US data highlighted an economic rebound.

Companies linked to the Archegos Capital Management meltdown last week were struck by a new wave of volatility after Credit Suisse initiated a block trade worth around $2.3 billion in an attempt to limit further losses.

Stocks including ViacomCBS, Discovery, and Tencent all whipsawed, and were down in premarket trading before recovering throughout the day.

The S&P 500 and Dow hit record highs Monday in the wake of a better-than-expected jobs report and record-high expansion in the services sector last month. Optimism around the economic recovery continues to drive markets.

Here’s where US indexes stood after the 4:00 p.m. ET close on Tuesday:

High valuations and other factors have been driving comparisons between current US stock market conditions and those during the dot-com era, but fundamentals are healthier now, said Charles Schwab’s chief investment strategist Liz Ann Sonders. Meanwhile, Nouriel Roubini, an economist known as “Dr. Doom” for his pessimistic market views, said markets are “extremely frothy” and participants are taking “too much risk” in an interview Tuesday.

Gold rose to 0.8% to $1,742.80 per ounce.

West Texas Intermediate crude rise by 1.24%, to $59.37 per barrel. Brent crude, oil’s international benchmark, was down 1% to $62.74 per barrel.

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