The Monday Market Minute
- Global stocks ease from record highs heading into a crucial week of data and earnings releases as the U.S. economy nears its post-pandemic 'inflection point'.
- Fed Chair Jerome Powell tells 60 Minutes that growth and job creation will pick-up sharply in the months ahead, adding inflation gains will likely recede near the end of the year.
- Inflation data on Tuesday, as well as retail sales figures on Thursday, will offer two significant signals for near-term growth prospects, while JPMorgan earnings Wednesday will unofficially kick-off the first quarter earnings season.
- Benchmark 10-year note yields ease to 1.655% ahead of a crucial week of bond auctions as the Treasury aims to raise more than $270 billion.
- CDC data shows 72.6 million Americans have now been fully vaccinated against the coronavirus, with around 183.5 million doses administered as of Sunday.
- U.S. equity futures suggest a softer open on Wall Street ahead of a crucial week with big bank earnings, inflation data, retail sales figures and bond auctions in focus.
U.S. equity futures peeled back from record highs Monday as traders and investors braced for a crucial week on Wall Street highlighted by the start of the first quarter earnings season, key readings on growth and inflation and billions in new bond auctions.
Federal Reserve Chairman Jerome Powell laid the groundwork for this week's deluge of corporate and economic news, telling CBS's 60 Minutes that the U.S. is at an 'inflection point' that will likely trigger faster growth and full employment in the coming months as the trillions in government and central bank support take hold in the world's biggest economy.
However, risks to the downside include a 'too fast, too soon' re-opening of businesses and travel around the country that would accelerate the spread of new variants of the coronavirus and undo the success the U.S. has had on its vaccine rollout.
"There really are risks out there. And the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we'll see another spike in cases," Powell told 60 Minutes.
Still, with nearly 175 million Americans having received at least one dose of the three vaccines on offer, the U.S. is heading for a level of herd immunity that could mark the end of the pandemic in the coming months, according to former FDA Commissioner Dr. Scott Gottleib.
That puts this week's plethora of market headlines even more in focus, as investors calibrate the strength of both the real economy, as well as the surging stock market, heading into the second half of the year.
JPMorgan (JPM) - Get JP Morgan Chase & Co. Report will kick off the first-quarter earnings season Wednesday, followed by similar updates from Wall Street rivals Citigroup (C) - Get Citigroup Inc. Report, Goldman Sachs (GS) - Get Goldman Sachs Group Inc. (The) Report, Morgan Stanley (MS) - Get Morgan Stanley Report, Wells Fargo (WFC) - Get Wells Fargo & Company Report and Bank of America (BAC) - Get Bank of America Corporation Report before the end of the week.
Investors will also need to navigate $271 billion worth of new bond auctions, including a Monday sale of benchmark 10-year notes, ahead of Tuesday's March inflation data and an update of retail sales figures on Thursday.
With all the ahead, U.S. equity futures were understandably cautious Monday, with contracts tied to the Dow Jones Industrial Average indicating an 80 point opening bell decline and those linked to the S&P 500, which is up 3.92% for the month, priced for a 7 point pullback from Friday's record high close.
Shares of Nuance Communications (NUAN) - Get Nuance Communications Incorporated Report were a notable pre-market mover, rising more than 18% to $54.00 a share on reports that tech giant Microsoft (MSFT) - Get Microsoft Corporation Report is set to pay $16 billion for the Burlington, Mass.-based artificial intelligence and speech technology group.
Alibaba's (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report U.S-listed shares were also on the move, rising 6% in pre-market trading, following a 9% surge in Hong Kong, as investors piled back into Asia's biggest tech company following a $2.75 billion antitrust fine levied by officials in Beijing.
In Europe, stocks were lower across the board heading into the heavy headline risk from U.S. markets this week, even as Britain emerged from its third national lockdown and uneven vaccine rollouts around the Continent began to take hold.
The Stoxx 600 was marked 0.27% lower in the opening hours of trading, while Britain's FTSE 100 fell 0.52% in London.
Overnight in Asia, a softer start to the week for stocks in China pulled the region-wide MSCI ex-Japan index into a 1.05% decline, while Japan's Nikkei 225 fell 0.77% to close oat 29,338.37 points.
Away from equities, benchmark 10-year note yields eased to 1.655% heading into this week's auction blast, while the dollar index slipped 0.05% against a basket of its global peers to trade at 92.116.
The dollar weakness helped oil prices bump modestly higher in early trading, although questions over the strength of energy demand in Europe, alongside pending supply increases from OPEC members over the coming months, kept U.S. crude under the $60 mark.