Morning Minutes

Stocks Bounce Back Ahead of US Speeches

bnn-20210119

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Building on gains in Europe this morning, where the Dax is up 1.3% and the FTSE is up 0.6%, US index futures are trying to bounce back this morning as well with Dow futures up 0.6% and NASDAQ futures up 1.1%. While this appears encouraging, today’s early gains appear moderate compared with yesterday’s US market declines which saw the Dow lose 2.0%, the S&P 500 fall 3.2% and the NASDAQ dive 4.2%.

There have been no major economic announcements overnight to sway sentiment, so it appears this morning’s gains may be related more to bargain hunting and short covering. A rebound for cryptocurrencies, with Bitcoin bouncing back 3.1% this morning suggests the recent panic may be easing for the moment. The big question for today is whether bulls can keep the morning party going through the day or if the bears plan to fight back.

It’s possible that investors, who have increasingly become accustomed to the notion of hawkish central banks lately, may be hoping politicians on the fiscal side can ride to the rescue with stock climbing ahead of today’s speeches by US Treasury Secretary at 10:00 am EDT, and US President Biden at 11:30 am EDT. The US 10-year treasury note yield dropping back to retest 3.00% may also be helping to ease headwinds, but traded rates may remain active over the next 24 hours with China reporting inflation numbers tonight and the US reporting consumer price inflation tomorrow morning (street 8.1% vs previous 8.5%).

Stocks remain active around earnings reports. Suncor Energy reported that higher energy prices boosted its EPS to $2.06 last quarter from $0.54 in the same quarter a year ago, enabling management to boost the dividend by 12% to a record $0.47. On the other hand, exercise equipment producer Peloton is down 26.0% in premarket action after the company posted a much larger loss than expected ($2.27 vs street $0.83). Results from Coinbase are due later today which may provide insights into the state of cryptocurrency trading.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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