Stock futures are higher as Wall Street awaits key inflation report

Fed actions this month could be ‘unhelpful’ for asset prices, Ameriprise says

The upcoming Federal Reserve meeting in September, where the central bank is expected to raise interest rates, is likely already priced into the market, according to Ameriprise market strategist Anthony Saglimbene.

“In our view, central bank actions this month are likely to be a non-event for asset prices,” he wrote in a Monday note. “But incoming economic data for the coming weeks and months and their influence on policy action next year could play a much more important role in shaping stock direction over the medium term.”[ads1];

Markets now expect the Fed to raise interest rates by 0.75 percentage points, meaning assets cannot move much if that is the central bank’s decision. A consumer price index report on Tuesday that is in line with expectations may not move the needle either.”

“Unless last month’s inflation numbers changed significantly more than expected, including Wednesday’s update on the August producer price index (PPI), we think a 75 basis point increase from the Fed is essentially locked in at this point,” he said.

—Carmen Reinicke

Relief rally is likely bear market bounce, Wells Fargo says

The recent relief rally in stocks is likely another bear market bounce, and investors should position themselves for more upside ahead, according to Wells Fargo.

“Yr-do-date, the outperformance of defensive, high shareholder payouts, high-quality and low-value stocks reminds investors of the hallmarks of a bear market,” global portfolio and investment strategist Chao Ma wrote in a Monday note.

Such recoveries occur in almost every bear market, and many are quickly reversed, leaving investors with regret, they added.

“Although it is difficult to predict the bottom of a bear market, in the past the market bottom was typically predicted by over-pessimistic market sentiment and a sign of definitive recovery in the underlying economic or market problem,” Ma said. “We think we’re not there yet in some respects.”

In the meantime, Ma advises investors to look for defensive stocks with low volatility, high dividends and share buybacks. He also says that investors should go for high quality names with profitability and leading market shares and reasonable market price.

—Carmen Reinicke

US stock futures rise ahead of Tuesday’s CPI report

U.S. stock futures were higher on Monday night as Wall Street looked ahead to the August consumer price index due on Tuesday morning. The report will give investors an update on the inflation situation in the US and is one of the last data the Federal Reserve will see before its September meeting.

Dow Jones Industrial Average futures gained 55 points, or 0.17%. S&P 500 and Nasdaq 100 futures rose 0.18% and 0.21%, respectively.

—Carmen Reinicke

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