© Reuters
Investing.com – U.S. futures erased early gains that came after Wednesday’s session ended with a collective gain on Wall Street.
In the meantime, most of the yellow metal’s gains faded, with the US dollar index cutting some of its losses in early trading, which comes after its rise to a 6-week peak.
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The market is watching
This comes as investors are still awaiting the outlook for monetary policy, after data this week showed US annual inflation slowed less than expected in January and retail sales rose.
“The US economy continues to do very well, there is very strong data coming out on the labor market, we think it has more work to do,” said Jarrod Kerr, chief economist at Kiwi Bank.
The markets are awaiting, during the next few hours, many important data that will clarify the picture regarding the Fed’s next move regarding prices.
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Average jobless claims in 4 weeks
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Data of the repercussions of persistent unemployment
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Unemployment claims rates
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Producer Price Index (MoM) (Jan)
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Housing starts index
What happened?
And by the end of trading yesterday, Wednesday, the US stock market succeeded in erasing its losses recorded during the session, to end trading on the rise.
This came with an improvement in investor sentiment following data that showed a rise that exceeded expectations for retail sales, and at the end of trading on Wednesday, it rose by 0.1%, or the equivalent of 38 points, to record 34.128 thousand points.
The broader Standard & Poor’s 500 Index rose by 0.3%, or 11 points, at 4,147 points, and the Nasdaq increased by 0.9%, or 110 points, to record 12,070 thousand points.
futures now
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Dow Jones futures fell 0.1%, or 30 points.
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Standard & Poor’s futures fell 0.15%, or 7 points.
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Nasdaq futures fell 0.225, or 30 points.
gold now
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Yellow metal futures rose by 0.1%, or the equivalent of $1.5, at levels of $1,847 an ounce.
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It rises – spot gold contracts by $ 2.4, or the equivalent of 0.1%, at levels of $ 1838 an ounce.
dollar now
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The main index decreased by 0.25%, near the levels of 103.68 points, after strong rises yesterday, Wednesday, near the levels of 104 points.
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The 10-year return decreased to 0.0172 points, down to 3.79%.
Yesterday’s rise in the dollar came after strong US retail sales data supported the resilience of the world’s largest economy, which reinforced expectations that the Fed will continue its tightening.
US retail sales rose sharply in January, after declining for two consecutive months, driven by purchases of cars and other goods, according to US Commerce Department data on Wednesday.
What drives the markets?
“Equities continue to rally, confusing those observers who are used to equating higher bond yields, which reflect concerns about further Fed rate hikes, with equity weakness,” said Stephen Innes, managing partner at SPI Asset Management.
In recent sessions, traders have digested data showing that US inflation has been flat and solid in retail sales, and this follows a surprisingly strong jobs report at the start of the month, according to Innes.
Benchmark US Treasury yields of 3.787% are close to their 2023 highs, Innes said, yet the S&P 500 is still just shy of its best since August, having rebounded 8% for the year so far.
Stocks hold up
“Equity markets are holding up much better than expected with Treasury yields rising,” said Mark Newton, Head of Technical Strategy at Fundstrat. “This will be something to continue to watch carefully.”
Newton noted that part of the reason for the decline of the Vix is that the Standard & Poor’s has been trading in a relatively narrow range over the past 10 sessions.
Newton added, “There remains a realistic threat of slight weakness in late February and this will be officially in action when S&P breaks 4060 levels.”
“On the contrary, the levels of 4160 and 4176 are the two areas to watch on the upside,” said Fundstrat’s Head of Technical Strategy.
