• February 8, 2023

Dow futures gain ground after inflation report

US stock index futures rose Wednesday morning after an inflation report showed modest rises, in line with economists’ expectations, and bond yields fell slightly.

What do major indices do?
  • Futures on the Dow Jones Industrial Average
    YM00, + 0.46%
    rose 142 points, or 0.5%, to 31,953.

  • S&P 500 futures
    ES00, + 0.32%
    rose 13 points, or 0.3%, to 3,886.

  • Nasdaq 100 futures
    NQ00, + 0.52%
    jumped 84 points, or 0.7%, to 12,872.50.

The tech-heavy Nasdaq Composite
COMP, + 3.69%
According to Dow Jones Market Data, the value rose 464.66 points, or 3.7%, on Tuesday, the largest daily percentage gain since November 4th. The rebound came a day after the index fell into correction territory, down 10% from its recent high. The Dow
DJIA, + 0.10%
rose 30.30 points, or 0.1%, during the S&P 500
SPX, + 1.42%
recorded an increase of 1.4%.

What is driving the market?

The US consumer price index in February showed that inflation rose slightly, as expected. Inflation rose 0.4% for the month, but excluding food and energy, the increase was 0.1%. Headline CPI increased from 1.4% to 1.7% per year, while the core gain decreased from 1.4% to 1.3% after 12 months.

US Treasury bond yields fell slightly on Wednesday, interrupting the momentum that has driven a rotation from soaring technology stocks and other growth stocks into more cyclically sensitive, value stocks.

The yield on the 10 year Treasury bill
TMUBMUSD10Y, 1.551%
was Decline by around 5 basis points to 1.547% before an Auction of 10-year benchmark notes valued at $ 38 billion. Yields, along with inflation expectations, have risen for five straight weeks.

“The recent rally in bond yields has hurt technology stocks the most because of their high valuations,” Charalambos Pissouros, senior market analyst at JFD, said in a note.

“High-growth technology companies are valued based on expected earnings in the years ahead. When yields rise, their discounted present value falls. The opposite is true when yields pull back. That’s why Nasdaq was the grand winner yesterday, ”said Pissouros.

Yields are rising as investors expect US economic growth to spike and inflation to accelerate, at least in the short term. The OECD said This week, President Biden’s coronavirus bailout will boost global economic growth by about one percentage point in 2021, and the U.S. growth rate has been revised from 3.2% to 6.5%.

The house is expected to have the passage of a $ 1.9 trillion COVID-19 relief bill Already on Wednesday, which is added to the previous rounds of aid spending.

Have to know: The stimulus money is not being spent, says Bank of America. So here are the investment steps to be taken

See also: The economy is ready to snap for stimuli and faster coronavirus vaccinations

Economic forecast: The US economy is ready to grow again – so is inflation

The data on the federal budget are to be published at 2 p.m. A deficit of $ 255 billion is expected.

Which companies are in focus?
What are other markets doing?

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