Morning Minutes

Stocks Rebound as Central Bank Day Arrives




For a second straight day, US markets tried to bounce back from morning losses on Tuesday afternoon but were unable to make it back to the green with NASDAQ finishing down 2.3% and the S&P losing 1.2%. Today, bulls and bargain hunters appear to be getting started earlier. Building on big gains in Europe, where the Dax is up 2.25% and the FTSE is up 1.75%, NASDAQ futures are up 1.9% and Dow futures are up 0.9%.

Commodity contracts are also on the rebound today with WTI crude oil rising 0.9% and copper climbing 1.4%. Natural gas is up 5.75% on another deep freeze in consuming regions. Cryptocurrencies are also on the rebound, with Bitcoin gaining 2.5% and Ethereum gaining 3.8%. Currency action is otherwise mixed with the commodity-sensitive Canadian and Australian Dollars rallying 0.5% and 0.3% respectively. Defensive plays are backing off a bit with gold and the Japanese Yen both falling 0.3%.

Much of the market action in the last week has been driven by investor speculation surrounding today’s Bank of Canada (news at 10:00 am EDT) and Federal Reserve Board (news at 2:00 pm EDT) monetary policy decisions and statements. While neither central bank is expected to make a move today, investors appear to be looking for hints on when interest rates may start to rise, and how many increases could be on the way this year. The Bank of Canada has suggested a start in the “middle months” of 2022, so investors may be looking for signs that timetable could be moved up. In the US, recent media reports have suggested significant speculation that the Fed could start raising rates as soon as March right after its asset purchases wrap up.

Meanwhile, investors have been responding favorably to positive earnings reports from Microsoft ($2.48 vs street $2.31, up 5.1% premarket), Texas Instruments ($2.27 vs street $1.94, up 4.7% premarket), and AT&T ($0.78 vs street $0.76). Toymaker Mattel is up 7.3% in premarket trading after winning back a license from Disney to produce “Frozen” related toys, while competitor Hasbro is down 1.6% premarket. Results from Tesla and Intel are due after the close today.   

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Colin Cieszynski, Chief Market Strategist

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

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