Wall Street’s key benchmarks oscillated early Tuesday after U.S. stocks started the week lower in a choppy session wrought by mixed corporate earnings and renewed Federal Reserve worries ahead of a fresh inflation report due out Thursday.
The S&P 500 hovered near the flatline, down 0.11%, while the Dow Jones Industrial Average gained 82.96 points, or +0.24%. The Nasdaq Composite wavered to edge 0.33% lower. Meanwhile, the benchmark 10-year Treasury note rose to 1.92%.
Mixed fourth quarter results from U.S. tech giants have weighed on investors already grappling with a Fed readying to tighten monetary conditions and raise interest rates as soon as next month. Stocks slid last week following a disappointing outlook from Meta Platforms (FB) and posted a sharp comeback following an earnings beat by Amazon’s (AMZN). Another trove of results lies in store for investors this week from companies including Disney (DIS), Uber (UBER), Lyft (LYFT), Pfizer (PFE) and Coca-Cola (KO). Peloton (PTON) will also unveil its 2021 year-end figures amid reports that companies including Amazon and Nike (NKE) are weighing potential acquisition bids.
“The first few weeks of this year were driven much more by macro concerns — higher interest rates, pricing the Fed, inflation,” Stuart Kaiser, UBS head of equity derivatives research, told Yahoo Finance Live. “Since then, we’ve had a window of opportunity where earnings took over.”
Despite a steep sell-off in Meta, other tech companies reported strong earnings that allowed the market to recover, Kaiser added.
“Now that that’s over – about 70% of S&P companies and 80% of tech companies reported earnings – we do think the focus shifts back to the macro side of the ledger this week,” he said, adding that the European Central Bank and Bank of England are tightening monetary policy along with the Fed and a series of high inflation prints are expected in coming months. “When we put that all together, we don’t think the bumpy ride is over.”
The Consumer Price Index (CPI) will be closely watched on Thursday and is likely to show another multi-decade high print on inflation, a reading that could prompt the Fed to assert the more hawkish stance it has taken on. Economists expect a headline CPI print of 7.3% in January over last year, which would mark the fastest rise since 1982, according to consensus estimates compiled by Bloomberg.
Bank of America said in a note out Monday that more downside in equities is likely — at least according to history.
The S&P 500 year-to-date-correction from early to late January was 9.8% on a daily closing price basis. During the midterm year of a U.S. presidential cycle, corrections on the S&P 500 averaged 20%, BofA technical research strategist Stephen Suttmeier pointed out. In 17 of 21 midterm years, the S&P 500 had corrections greater than 9.8%, 15 years saw corrections of 15% or more, and nine out of 10 experienced corrections of at least 20%.
The index struggles just after a first Fed rate hike but tends to do better for the 5-, 6- and 12-month periods after initial increase, according to Suttmeier. Furthermore, the best part of the presidential cycle follows from the midterm year low through the third year of the term. Bank of America indicated that rallies off the low into year-end can be strong and have an average return of 17.6%.
“U.S. equities tend to struggle just after the first rate hike of a Fed tightening cycle, which could come as early as the March FOMC meeting, but the data suggest buying a dip,” Suttmeier wrote.
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9:30 a.m. ET: Stocks struggle for direction after starting week lower
Here were the main moves in markets at the start of Tuesday’s session:
S&P 500 (^GSPC): -2.86 (-0.06%) to 4,481.01
Dow (^DJI): +106.38 (+0.30%) to 35,197.51
Nasdaq (^IXIC): -82.34 (-0.58%) to 14,015.67
Crude (CL=F): -$1.21 (-1.33%) to $90.11 a barrel
Gold (GC=F): +$0.80 (+0.04%) to $1,822.60 per ounce
10-year Treasury (^TNX): +4.9 bps to yield 1.9650%
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9:15 a.m. ET: Aluminum hits highest since 2008
Aluminum prices hit their highest level since 2008, closing in on a record, according to Bloomberg data.
Supply-chain woes have resulted in surging prices on raw materials such as aluminum and copper for consumer items including refrigerators, automobiles, and plumbing systems. The cost to transport aluminum now accounts for 20% of the metal’s total price, while the benchmark price to ship copper in the U.S. is at the highest in data going back to 2003, per Bloomberg.
Contracts on aluminum for April 2022 delivery (ALI=F) were up 3.60% to 3,266.25 per ton as of 9:00 a.m. ET.
“We believe that we’ll see a sharp decline from second quarter on because we see the logistics logjam gradually dissipating,” Jorge Vazquez, managing director focused on the aluminum market at Harbor told Bloomberg News.
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7:00 a.m. ET: Contracts tied to S&P 500, Dow, and Nasdaq trade near flatline
Here’s how Wall Street’s key benchmarks fared in pre-market trading Tuesday:
S&P 500 futures (ES=F): -5.50 points (-0.12%), to 4,470.25
Dow futures (YM=F): +6.00 points (+0.02%), to 34,975.00
Nasdaq futures (NQ=F): -28.00 points (-0.19%) to 14,531.75
Crude (CL=F): -$1.44 (-1.58%) to $89.88 a barrel
Gold (GC=F): -$3.20 (-0.18%) to $1,818.60 per ounce
10-year Treasury (^TNX): -1.4 bps to yield 1.9160%
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6:45 a.m. ET: Peloton taps new CEO amid acquisition reports
Peloton Interactive Inc. () is expected to replace its Chief Executive Officer, co-founder John Foley, who will step down and become executive chair, according to a .
The company will appoint Barry McCarthy to serve as its new chief executive. McCarthy was CFO at Spotify (SPOT) before retiring in 2019 and is known on Wall Street as the innovative architect of the company’s 2018 direct listing.
Peloton will also slash 2,800 jobs as it seeks to better align costs with slowing demand for its connected bikes.
The shakeup comes on the following a separate late Friday that said Amazon and Nike have expressed interest in buying Peloton. Shares of the stationary bike manufacturer 20% in trading Monday. The stock is back to trading above the $29 IPO price from 2019.
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6:01 p.m. ET Monday: Futures tick higher after closing in the red to start the week
Here were the main moves in markets ahead of overnight trading Monday:
S&P 500 futures (ES=F): +7.24 points (+0.16%), to 4,483.00
Dow futures (YM=F): +34.00 points (+0.10%), to 35,003.00
Nasdaq futures (NQ=F): +35.00 points (+0.24%) to 14,594.75
Crude (CL=F): +$0.18 (+0.2-%) to $91.50 a barrel
Gold (GC=F): -$0.10 (-0.01%) to $1,821.70 per ounce
10-year Treasury (^TNX): -1.4 bps to yield 1.9160%
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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