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Dow Futures Rise 300 Pts; Bouncing Ahead of ADP, ISM Data

Stock MarketsDec 01, 2021 23:16
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By Peter Nurse - U.S. stocks are seen opening higher Wednesday, bouncing in the wake of the previous session’s sharp selloff on worries over the Fed considering a quick departure from its accommodative monetary policy and ahead of key economic data.

At 7 AM ET (1200 GMT), the Dow Futures contract was up 300 points, or 0.9%, S&P 500 Futures traded 57 points, or 1.3%, higher and Nasdaq 100 Futures climbed 250 points, or 1.5%.

The major indices closed significantly lower on Tuesday, hit by Federal Reserve Chair Jerome Powell telling the Senate Banking Committee that the risk of inflation has increased, and that it was therefore time to retire the word ‘transitory’.  He also suggested the central bank could speed up the timeline for cutting back on bond buying to support the economic recovery by a couple of months.

The blue chip Dow Jones Industrial Average lost more than 650 points, or 1.9%, the broad-based S&P 500 dropped 1.9% and the tech-focused Nasdaq Composite dipped 1.6%.

This hawkish turn from Powell came despite the uncertainty surrounding the virulence of the omicron variant, its ability to evade vaccine protection and the extent of the economic damage caused by travel restrictions to curb its spread.

Air travellers to the United States will now face tougher Covid-19 testing rules, joining some 56 countries that were reportedly implementing travel measures to guard against omicron as of Nov. 28, according to the World Health Organisation. 

Powelll's testimony continues later on Wednesday, while the economic data slate includes U.S. private payrolls, ahead of Friday’s official monthly jobs report, and the November ISM manufacturing PMI release.

“U.S. data should continue to show strong numbers over the coming weeks (ISM and ADP (NASDAQ:ADP) today) which will foster expectations that the Fed could turn more hawkish at the December 16th FOMC meeting (in spite of omicron),“ said analysts at ING, in a note.  

Turning to the corporate sector, Salesforce (NYSE:CRM) will be in the spotlight after the software company issued disappointing guidance for the current quarter late Tuesday. Elsewhere, Crowdstrike (NASDAQ:CRWD), Okta (NASDAQ:OKTA), Splunk (NASDAQ:SPLK) and PVH (NYSE:PVH) all report earnings after the close.

Crude prices traded higher Wednesday, recouping some of the hefty losses of the previous session, ahead of a key meeting of top producers to decide future output levels. 

Expectations are growing that the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, will agree to pause plans to add 400,000 barrels per day of supply in January given the potential hit to demand from the travel restrictions put in place to tackle the new omicron variant.

The American Petroleum Institute reported a fall of 747,000 barrels from U.S. crude inventories for last week, a smaller draw than expected, and investors now await crude oil supply from the U.S. Energy Information Administration at 10:30 AM ET.

By 7 AM ET, U.S. crude futures traded 4.4% higher at $69.05 a barrel, having slumped 5.4% on Tuesday, while the Brent contract rose 4.6% to $72.40, after falling 3.9% during the previous session.

Additionally, gold futures rose 0.6% to $1,787.15/oz, while EUR/USD traded 0.1% lower at 1.1322.


Dow Futures Rise 300 Pts; Bouncing Ahead of ADP, ISM Data

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