Last Week's Close
E-mini S&P 500 Futures (March): Settled at 3834.25, down 11.75 on Friday and up 72.00 on the week
E-mini Nasdaq-100 Futures (March): Settled at 13,361.50, down 34.00 on Friday and up 559.25 on the week
The S&P and Nasdaq are each pointing higher ahead of the open, however, it was the Nasdaq and Russell 2000 that set fresh record highs overnight. Whereas the Nasdaq is clinging to gains of about 1%, the Russell 2000 has turned lower on the session. As we look to the week ahead, froth certainly exists in some corners of the market, but as we’ve discussed many times, one can’t predict that the market is broadly a sell just because it “feels” frothy. Of course, hurdles that could quickly exhaust the tape are lurking and it’s our job to stay vigilant.
First and foremost, President Biden’s $1.9 trillion fiscal plan is seeing increased opposition. The new administration wants to establish leadership across Washington and is reaching for the 60 votes required in the Senate to pass major legislation. Mitt Romney, a Republican Senator, called the price tag “shocking,” especially directly after the $900 billion fiscal package in December. Even Democrats are requesting details to justify the monumental spending bill.
On Wednesday, the Federal Reserve concludes a 2-day policy meeting. Although there’s currently a 0% probability the Fed even thinks about raising rates through June, the thought of tapering their unprecedented pandemic bond purchases did poke its head out 2 weeks ago. This thought aided the last leg of the 10-year Treasury yield’s push to 1.18%, an 11-month high. Rising yields could quietly and quickly become one of the stickiest headwinds for this market as 2021 unfolds.
Lastly, the pandemic has slowed economic activity around the world; current and potential restrictions remain a clear headwind. However, on Friday, Flash PMI data from the U.S. handedly topped expectations. Still, the U.S. jobs picture has certainly deteriorated in recent months and many questions overshadow both the U.S. and Eurozone recovery. This morning, German Ifo Business Climate and Expectations data all fell short of estimates.
The earnings and economic calendar are both more quiet to start the week, but will pick up as it unfolds. ECB President Christine Lagarde speaks at 10:00 a.m. CT and there’s a 2-year Note auction at noon CT. Tomorrow, we look to U.S. Consumer Confidence data and a deluge of earnings from Microsoft, Johnson & Johnson, Starbucks, AMD, and more.
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