S&P 500 Forecast Day Ahead Outlook: Inflation concerns still weigh as big tech resumes decline
Here is what you need to know on Monday, February 22:
Update: US markets open lower with energy stocks continuing to outperform as tech drops. Selected gainers were mostly energy stocks BP ExxonMobil, ConocoPhillips, Chevron, Disney, GE and Oracle.
Stocks suffering were Tencent, Banco Santander, Novavax, Zillow, Moderna, Tesla, Zoom, PayPal, Apple, Uber, Plug and NIO.
UK Prime Minister Boris Johnson outlines the roadmap for opening the UK economy. Shops, gyms, and hospitality to open by April 12, indoor dining hotels, and attendance at sporting events by May 17.
Stock markets have taken an "as you were" tone so far in Monday's trade. The sell-off continues in Big Tech names, following on from declines seen on Thursday and Friday. So-called inflation concerns linger, with US 10-year yields continuing their ascent, above 1.35% again. Inflation concerns seem over-exaggerated at such low levels and especially given the still negative yields in most of the European sovereigns. However, something has to stall the rally in global stock markets, so investors have decided to focus on inflation.
As a result, the dollar continues to suffer, with Dollar Index down again on Monday and cable continuing its recent strong performance. The roadmap for the reopening of the UK economy is due to be announced later on Monday by Boris Johnson. Gold continues to benefit from inflationary pressures and oil bucks the two-day losing streak. Commodities remain bid.
European markets were negative on Monday, with the Dax losing 0.65%, FTSE down 0.7%, and Euro Stoxx dropping 0.8%.
Asian shares closed mixed with Hang Seng down 1% and Nikkei bucking the trend with a 0.46% gain.
US futures are all pointing lower, with Dow down 0.5%, S&P down 0.7%, and the Nasdaq 1.2% lower.
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S&P 500 news
German IFO beat across all sectors current conditions, business climate, and most importantly, expectations index.
Chicago National Activity Index hits 0.66 from a forecast of 0.50 and a previous 0.52.
Federal Reserves Robert S. Kaplan is due to speak at 1400 GMT, 9EST.
Goldman Sachs ups its oil price target to 472 as global demand recovers.
Boeing in trouble again as it says airlines should suspend using some 777 jets after the Denver incident. The UK has just announced it will not allow 777 using Pratt & Whitney engines into its airspace.
Australia continues its fight with Facebook as legislators say they will not change laws to make Facebook pay for news content.
Bitcoin dropped as Elon Musk continued to tweet about the cryptocurrency. Musk tweeted Bitcoin prices "seem high" at the weekend. This despite Tesla making a reported $1 billion on its Bitcoin investment.
US President Joe Biden tweaks the small business loans scheme to target smaller firms.
AT&T, Walmart, Comcast, Microsoft, and others reduced donations to Republican candidates that support former President Donald Trump.
Gamestop is up again after reports Keith Gill, aka Roaring Kitty, increased his position in Gamestop.
HSBC is rumoured to withdraw from retail banking in the US.
Goodyear is to buy Copper Tire for $2.8 billion in stock and cash.
Activist investor Elliot Management has taken a stake in Principal financial.
Fed's Kaplan says expects some firming in inflation.
Deutsche upgraded the airline sector in a note issued Monday. Picking United, Delta, Southwest, and JetBlue and upgrading them to Buy.
Ups and Downs
Deere was increased to a $403 price target by Credit Suisse.
Snap was upgraded by Morgan Stanley.
Target had its price target increased to $260 from Bank of America.
General Electric was increased at Goldman Sachs.
Airbnb was upgraded at Loop to a buy rating.
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
