Monday, March 20, 2017
U.S. equities traded mostly higher on Monday, while investors turned their eyes to comments from several Federal Reserve officials.
The Nasdaq composite hit a fresh all-time high in midmorning trade, outperforming the other major indexes, and held about 0.15 percent higher.
The Dow Jones industrial average rose about 40 points, with Caterpillar and Disney contributing the most gains. The S&P 500 held just above breakeven.
“Investors want to know what the Fed has to say about the next rate hike,” said Adam Sarhan, CEO of 50 Park Investments. “That’s going to be the headline this week.”
The U.S. central bank raised interest rates for the second time in three months last week, but the “dot plot” that shows each member’s expectations for where rates will be in coming years changed little from the last meeting.
Minneapolis Fed President Neel Kashkari spoke with CNBC’s “Squawk Box” on Monday, saying he voted against a rate hike last week because he wanted to see more inflation in the U.S.
Philadelphia Fed President Patrick Harker told CNBC’s “Squawk on the Street” that it’s OK if inflation overshoots the Fed’s inflation target as the labor market tightens.
“Obviously there’s a lag to inflation. We have to be careful of not getting behind the curve,” said Harker.
Chicago Fed President Charles Evans is scheduled to deliver a speech Monday afternoon.
Treasurys traded mixed, with the short-term two-year note yield slipping to 1.30 percent and the benchmark 10-year note yield holding flat at 2.496 percent.
The postelection rise in equities and Treasury yields has largely slowed down recently as investors await for more details on the White House’s tax reform, deregulation and government spending proposals.
“The market has had a pretty big run [in stocks] and a consolidation is possible here,” said Bruce Bittles, chief investment strategist at Baird. “We’ll likely move sideways here in the near term and after that we’ll continue to go up again.”
Investors also kept an eye on oil prices, as prices were pressured by rising inventories.
“Sure, there’s a lot of supply, but what about demand? If demand is waning, that could be trouble for the market,” said 50 Park’s Sarhan.
U.S. crude futures for April delivery fell 1 percent to $48.27 per barrel.
Meanwhile, Wall Street also braced for a contentious House vote on the GOP health care bill slated for Thursday. The bill’s passing is seen as a step toward enacting tax reform, but it has faced criticism from both Republicans and Democrats.
Overseas, European equities traded mostly lower after the G-20 failed to agree on a joint communication that supported free and open trade.
Meanwhile, the pound slipped against the dollar after UK Prime Minister Theresa May’s office announced the country will trigger Article 50 to exit the European Union on March 29.
“The country is divided and this is the biggest task that currently rests in her hands. Theresa May is going to start touring the UK in an attempt to bring the country together and create more support for Article 50,” said Naeem Aslam, chief market analyst at Think Markets, in a note.
On tap this week:
1:10 p.m. Chicago Fed President Charles Evans
Earnings: FedEx, Nike, Petrobras, General Mills, Lennar, Lands’ End
8:30 a.m. Current account
8:30 a.m. Philadelphia Fed manufacturing
12:00 p.m Kansas City Fed President Esther George
6:00 p.m. Cleveland Fed President Loretta Mester
Earnings: Tencent, Winnebago, Five Below, Acushnet
9::00 a.m. FHFA home prices
10:00 a.m. Existing home sales
Earnings: Conagra, Scholastic, KB Home, Accenture, GameStop, Shoe Carnival, Micron
8:30 a.m. Initial claims
8:45 a.m. Fed chair Janet Yellen makes opening remarks at Strong Foundations Conference
10:00 a.m. New home sales
12:30 p.m. Minnepolis Fed President Neel Kashkari at Strong Foundations Conference
7:00 p.m. Dallas Fed President Rob Kaplan
Earnings: Finish Line
8:30 a.m. Durable goods
8:45 a.m. Chicago Fed’s Evans
9:05 a.m. St. Louis Fed President James Bullard
9:45 a.m. Manufacturing PMI
10:00 a.m. New York Fed President William Dudley