With another mighty push, the bulls managed the sixth day of gains, testing resistance levels even as traders now price in a 50 basis point rate increase for May. Inflation continues to impact consumer activity, with Mortgage Applications falling by -8.1% while Brent Crude passed 118 a barrel this morning. Jerome Powell will be speaking again before today’s open, with housing and petroleum numbers coming out during the morning session. So, be careful chasing already extended stocks even though we may still experience some end-of-quarter window dressing.
Asian markets closed green across the board led by the Nikkei surging 3.00% higher. European markets trade mixed but mostly lower this morning with U.K. inflation hitting multi-decade highs and Ukraine war pressures. U.S. futures point to lower open as they assess the impacts of inflation and more hawkish Fed willing to sacrifice growth to fight the rapidly rising consumer prices.
Economic Calendar
Earnings Calendar
We have less than 50 companies listed on the Wednesday earnings calendar. Notable reports include AWH, CTAS, CRBLF, FWRG, GIS, FUL, JKS, KBH, OLLI, SOL, SIEN, SCS, TCEHY, COOK, TCOM, WGO, & WOR.
News & Technicals’
Transportation Secretary Pete Buttigieg on Wednesday announced $2.9 billion for new competitive grants designed to improve U.S. transportation infrastructure. The sum, part of the bipartisan $1 trillion infrastructure law President Joe Biden signed into law, is intended to bankroll highway, bridge, and freight projects. State, regional and local governments will be able to contend for the grant funding through three separate programs with a single application. As a result, Tencent reported its slowest quarterly revenue growth on record in the fourth quarter of 2021. Revenue came in at 144.18 billion yuan ($22.62 billion), up 8% year-on-year. The Chinese technology giant continues to feel the impact of Beijing’s regulatory tightening on the domestic technology sector. The delisting of U.S.-listed Chinese stocks may come in the next two to three years, according to Jamie Allen of the Asian Corporate Governance Association. Dual-listed Chinese stocks were recently in the spotlight after delisting fears reemerged following a U.S. Securities and Exchange Commission announced that U.S.-listed securities for five Chinese companies are at risk of delisting. Following an initial plunge, the shares later saw a sharp reversal after Chinese state media reported that the U.S. and China regulators are progressing toward a cooperation plan on U.S.-listed Chinese stocks. CNBC’s Jim Cramer on Tuesday warned investors against buying unprofitable stocks due to unwarranted optimism about the stock market. “Right now, we need to bow down to the Fed and the forces of inflation,” the “Mad Money” host said. Treasury yields turned slightly lower in early Wednesday trading, with the 10-year dipping less than a basis point to 2.3753%, while the 30-year moved slightly higher to 2.932%.
Indexes surged higher with the SPY and QQQ making it the sixth day of gains in the relief rally even as volume continued to decline. However, with traders now pricing in a 50 basis point increase in May, the bulls may find it challenging to keep the pace. Before the bell, Jerome Powell delivers another speech, but it seems unlikely he will change his hawkish tough talk in light of the rapidly rising commodity prices. Then we will turn our attention to New Home Sales figures and the Petroleum status report before the 20-year bond auction at 1:00 PM Eastern. Consumers worldwide are feeling the pinch of inflation, and more and more, we hear about the possibility of a recession, so be very careful chasing already extended stocks. Though we could see a more bullish end-of-quarter window dressing, it is hard to imagine 2nd a vigorous round of 2nd quarter earnings with food and energy prices restricting consumer activity.
Trade Wisley.
Doug
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