Monday December 13th


S&P 500 looks set to add to its record close from Friday with futures higher

U.S. stock index futures rose early Monday after the index notched its best week since February at a fresh record close, rebounding from a big sell-off triggered by fears of the omicron coronavirus variant. Dow Jones Industrial Average futures traded 30 points higher, or 0.1%. S&P 500 futures inched up 0.2% and Nasdaq 100 futures were up 0.34%. Moderna shares were among the strongest gainers premarket Monday, rising 2.4% a day after the White House’s top infectious disease expert Dr. Anthony Fauci called Covid booster shots “optimal care,” but said the definition of fully vaccinated would not change. Elsewhere, Apple moved closer in its quest to become the market’s first $3 trillion company, gaining 1% premarket following an upgrade from JP Morgan. Also, chipmaker Nvidia, which has become a signature reopening trade, was up 1.7% on optimism that omicron would not be as disruptive as initially thought. The early Monday action followed a strong week on Wall Street as investors shrugged off a hot inflation reading. The blue-chip Dow gained 4% last week, breaking a four-week losing streak with its best weekly performance since March. The S&P 500 and the Nasdaq Composite jumped 3.8% and 3.6%, respectively, last week, both posting their best weekly performance since early February. Investors digested a jump in headline inflation data, which came in at 6.8% in November year-over-year for the biggest surge since 1982. The print was marginally higher than the 6.7% Dow Jones estimate. “The fact is that inflation is likely to remain on the higher side for a while and risks of sticky inflation remain, although we believe that the passing of base effects and the easing of supply chain constraints by the end of the first quarter of next year should slowly bring inflation down to more comfortable levels,” Rick Rieder, BlackRock’s chief investment officer of global fixed income, said in a note. The key inflation reading came ahead of the Federal Reserve’s two-day policy meeting this week where the policymakers are expected to discuss speeding up the end of its bond-buying program. Fed Chair Jerome Powell, as well as a parade of Fed speakers, all recently suggested the central bank could end the $120 billion monthly bond purchase program sooner than the current timeline of June 2022. “We believe markets can continue take a higher inflation reading in their stride, though additional volatility remains a risk. With Fed policy staying relatively accommodative, the backdrop for equities is still positive, and we favor winners from global growth,” said Mark Haefele, Chief Investment Officer of UBS Global Wealth Management. Stocks bounced back last week as investors bet that the initial worry about the Covid strain is overblown. Many also took solace in the news from Pfizer and BioNTech that a study found three doses of their vaccine provides a high level of protection against the variant. As of Sunday, the U.S. was approaching 800,000 coronavirus-related deaths. The new variant has pushed some government officials to reinstate health restrictions to slow the spread. Asia-Pacific markets traded mixed on Monday, with some indexes giving up gains, as investors turned their focus to a number of monetary policy meetings happening this week. In Japan, the Nikkei 225 rose 0.71% to 28,640.49 while the Topix index added 0.13% to 1,978.13. South Korea’s Kospi gave up earlier gains and fell 0.28% to 3,001.66. Hong Kong’s Hang Seng index gave up early gains and fell 0.17% to 23,954.58. Chinese mainland shares also advanced: The Shanghai composite rose 0.4% to 3,681.08 and the Shenzhen component added 0.67% to 15,212.49. Oil was steady on Monday, but new concerns about the Omicron coronavirus variant and doubts around the effectiveness of vaccines against it were weighing on prices. Brent slid 49 cents, or 0.65%, to $74.65 per barrel, and U.S. West Texas Intermediate (WTI) declined 44 cents, or 0.6%, to $71.23 per barrel. Both benchmarks posted gains of about 8% last week, their first weekly gain in seven. Gold steadied in a narrow range on Monday as the market focus pivoted to this week’s Federal Reserve meeting to learn how quickly it plans to unwind economic support measures introduced in response to the coronavirus pandemic. Spot gold was last up 0.1% at $1,783.91 per ounce as of 0947 GMT. U.S. gold futures were flat at $1,784.70.