Morning Minutes

Indices Shrug Off Retailer Profit Warnings; Powell Testifies Today



US index futures are in the green with bulls apparently trying to build on yesterday’s intraday rebound that saw the NASDAQ erase a sizeable morning selloff to finish the day with a slight gain. NASDAQ futures are up 0.3% this morning building on Monday’s bullish reversal, while Dow futures are up 0.1%, only able to reverse part of Monday’s 0.4% loss for the Dow Industrials. European markets are also bouncing back today with the Dax rallying 1.2% and the FTSE climbing 0.6%. Commodity and cryptocurrency markets are also rebounding today with WTI crude oil up 1.6%. while copper and Bitcoin are both up 0.9% and Ethereum is up 2.5%.

With the quarter over and US earnings season kicking off on Friday, we are in the heart of confession season. Overall it has been quiet for most sectors outside of retailing. It appears that the Omicron Wave has negatively impacted holiday season sales for several retailers, particularly clothing stores, but market action suggests that some disappointment may have already been priced in. Yesterday, lululemon gapped down on the open then clawed back most of its losses following a profit warning. This morning, Abercrombie is up slightly in premarket trading despite warning on soft holiday sales overnight.

Action in retailers appears to mainly be contained to that group with investors’ primary focus apparently firmly planted on the confirmation hearings for US Fed Chair Powell’s second term today, and incoming Fed Vice-Chair nominee Brainard on Thursday. In what could be the opening battle between the hawkish (Powell) and dovish (Brainard) camps at the Fed which could play out over the next few months, investors may look to prepared comments from both and how they answer questions from politicians for hints into how aggressively the Fed could move to raise interest rates once its asset purchase program ends in March. So far this morning, the US 10-year treasury note yield is hanging around 1.75% having touched 1.80% yesterday.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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