Wednesday January 13th


Stock futures fall as Wall Street struggles for a direction

U.S. stock index futures fell slightly on Wednesday as the market struggled for direction for a second day amid rising rates, political uncertainty and a still raging pandemic. Futures contracts tied to the Dow Jones Industrial Average traded 45 points lower, or 0.2%. S&P 500 futures dipped 0.2%, along with Nasdaq 100 futures. Traders digested the latest inflation-data release, as the U.S. consumer price index rose 0.4% in December. That was in line with a Dow Jones estimate. Stocks rose in the first week of 2021, but have since stalled out. The market closed little changed on Tuesday. The Dow Jones Industrial Average rose 60 points, or 0.2%, to 31,068.69. The Nasdaq Composite ended the day up 0.3% and the S&P 500 rose slightly to 3,801.19. Meanwhile, the yield on the benchmark 10-year Treasury briefly traded at 1.18%, its highest level since March. Given the rise in rates, Credit Suisse recommended that investors favor pro-cyclical sectors, including financials and energy. Rising rates could hurt growth stocks, however, and a number of tech heavyweights including Facebook and Apple declined during Tuesday’s session. Expectations for additional fiscal stimulus is one of the reasons behind the steady move higher in yields. President-elect Joe Biden is expected to release details on his economic plan on Thursday. “At a minimum, even a USD 500bn fiscal package consisting of additional stimulus checks, extended unemployment benefits, and funding for healthcare and vaccine disbursement will be another boost to economic growth in 2021,” noted Jason Draho, UBS Global Wealth Management head of Americas asset allocation. Following Tuesday’s muted session, the major averages remain lower for the week after Monday’s slide. The Nasdaq Composite is the relative underperformer, down roughly 1% over the last two sessions. Small caps are, however, a bright spot, and the Russell 2000 is up 1.7% so far this week. The moves come as turmoil in Washington continues. Vice President Mike Pence said Tuesday night he will not remove President Donald Trump from office. That came before the Democratic-held House approved a resolution urging Pence and the Cabinet to push Trump out of the White House after he incited last week’s riot on the Capitol. The House of Representatives plans to vote on Wednesday to impeach Trump for a second time. Covid cases also continue to increase in the U.S. and abroad. The U.S. is recording at least 248,650 new Covid-19 cases and at least 3,223 virus-related deaths each day, based on a seven-day average calculated by CNBC using Johns Hopkins University data. Still, many say the U.S. is poised to return to growth later this year. Stocks in Asia-Pacific were mixed on Wednesday as investors watched for developments on the coronavirus front. In Japan, the Nikkei 225 advanced 1.04% to close at 28,456.59 while the Topix index rose 0.35% to end its trading day at 1,864.40. Mainland Chinese stocks were lower on the day, with the Shanghai composite down 0.27% to 3,598.65 while the Shenzhen component shed 0.612% to 15,365.43. Hong Kong’s Hang Seng index was little changed, as of its final hour of trading. South Korea’s Kospi gained 0.71% to close at 3,148.29. Oil prices steadied after an early jump on Wednesday as industry data showing a bigger-than-expected drop in U.S. crude inventories, but rising global COVID-19 infections capped price gains. Brent crude prices were up 15 cents at $56.73 a barrel. Prices rose to a session high of $57.42 a barrel earlier in the session, the highest since Feb. 24. The next milestone for Brent prices is a rise above $60, a level not seen since late January 2020. U.S. West Texas Intermediate (WTI) was up 20 cents at $53.41, after hitting a session high of $53.93, its highest since Feb. 20. Gold prices eased on Wednesday, reversing earlier gains, as the dollar firmed and U.S. yields held close to recent highs, with investors awaiting for more details on American fiscal stimulus measures. Spot gold was down 0.1% at $1,853.80 per ounce, while U.S. gold futures were up 0.6% at $1,854.30.