Market Analysis

Beyond the Numbers

Futures Pointing To Mixed Open On Wall Street
3/26/2021 8:58 AM

The major U.S. index futures are currently pointing to a mixed open on Friday, with stocks likely to move in opposite directions in early trading.

Stocks closely linked to the economy reopening, such as airlines and cruise operators, may extend yesterday’s advance after President Joe Biden doubled his goal for the administration of coronavirus vaccines in his first 100 days in office.

Early strength is also likely to be seen among banking stocks after the Federal Reserve announced restrictions on bank holding company dividends and share repurchases will end for most firms after June 30th.

The Fed said firms with capital levels above those required by the current round of stress tests will no longer be subject to the additional restrictions.

“The banking system continues to be a source of strength and returning to our normal framework after this year's stress test will preserve that strength,” said Fed Vice Chair for Supervision Randal K. Quarles.

On the other hand, a rebound by treasury yields may weigh on high-growth technology stocks, leading to an initial drop by the tech-heavy Nasdaq.

The yield on the benchmark ten-year note has moved notably higher after trending lower earlier this week but remains well off last week’s fourteen-month highs.

After coming under pressure early in the session, stocks showed a significant turnaround over the course of the trading day on Thursday. The major averages all bounced well off their lows of the session and into positive territory.

The tech-heavy Nasdaq showed a substantial recovery, ending the day up 15.79 points or 0.1 percent at 12,977.68 after tumbling by as much as 1.4 percent. The Dow also climbed 199.42 points or 0.6 percent to 32,619.48 and the S&P 500 rose 20.38 points or 0.5 percent to 3,909.52.

The turnaround on Wall Street seemed to reflect optimism about the U.S. economy reopening after President Joe Biden announced a new goal of administering 200 million coronavirus vaccinations within his first 100 days in office.

The new goal is double the 100 million shots in 100 days that Biden initially pledged and was reached before his 60th day in office.

"I know it's ambitious, twice our original goal. But no other country in the world has even come close, not even close to what we are doing. I believe we can do it," Biden told reporters at his first official press conference as president.

According to the Centers for Disease Control and Prevention, 133 million Covid vaccines have been administered, with more than 14 percent of the population fully vaccinated.

The weakness seen earlier in the day partly reflected renewed concerns about the outlook for monetary policy following comments from Federal Reserve Chair Jerome Powell.

In an interview on National Public Radio's "Morning Edition," Powell noted accelerated coronavirus vaccine distribution combined with support from Congress will enable the U.S. to reopen the economy sooner than might have been expected.

Powell also said the Fed plans to gradually roll back its asset purchases as the economy makes substantial progress towards the Fed's goals of maximum employment and price stability.

While Powell stressed the pullback in support will only come when the "economy has all but fully recovered," the comments still seemed to spook investors.

However, investors may have been calmed by the lack of response by the bond markets, with the yield on the benchmark ten-year note ending the day unchanged.

On the U.S. economic front, the Labor Department released a report showing initial jobless claims fell to their lowest level since the early days of the pandemic.

The report said initial jobless claims slid to 684,000 in the week ended March 20th, a decrease of 97,000 from the previous week's revised level of 781,000.

Economists had expected jobless claims to decline to 730,000 from the 770,000 originally reported for the previous week.

With the much bigger than expected decrease, jobless claims dropped to their lowest level since hitting 282,000 in the week ended March 14, 2020.

A separate report from the Commerce Department showed economic activity in the U.S. unexpectedly grew faster than previously estimated in the fourth quarter of 2020.

The report showed real gross domestic product surged up by 4.3 percent in the fourth quarter compared to the previously reported 4.1 percent jump. Economists had expected the pace of GDP growth to be unrevised.

Airline stocks showed a substantial move back to the upside after falling sharply in recent sessions, with the NYSE Arca Airline Index soaring by 3.8 percent. The index bounced off its lowest closing level in over a month.

Considerable strength also emerged among housing stocks, as reflected by the 3.1 percent spike by the Philadelphia Housing Sector Index.

Shares of KB Home (KBH) showed a notable turnaround after initially coming under pressure following the release of mixed quarterly results.

Banking stocks also moved significantly higher over the course of the session, resulting in a 2.8 percent jump by the KBW Bank Index.

Networking, biotechnology and natural gas stocks also saw notable strength on the day, while some weakness remained visible among gold and software stocks.

Commodity, Currency Markets

Crude oil futures are jumping $1.38 to $59.94 a barrel after plunging $2.62 to $58.56 a barrel on Thursday. Meanwhile, after falling $8.10 to $1,725.10 an ounce in the previous session, gold futures are edging down $0.50 to $1,724.60 an ounce.

On the currency front, the U.S. dollar is trading at 109.77 yen versus the 109.19 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1774 compared to yesterday’s $1.1764.


Asian stocks rose on Friday amid economic optimism as U.S. President Joe Biden pledged to double his administration's vaccination rollout plan and the Federal Reserve reiterated that its expansive monetary policy would not come to an end until a nearly full recovery from the pandemic.

Chinese markets rebounded after closing at three-month lows the previous day amid regulatory concerns. The benchmark Shanghai Composite jumped 54.74 points, or 1.6 percent, to 3,418.33, while Hong Kong's Hang Seng Index ended up 436.82 points, or 1.6 percent, at 28,336.43.

Japanese shares rallied as investors sought bargains after a sharp drop this week. The Nikkei 225 Index surged up 446.82 points, or 1.6 percent, to 29,176.70, while the broader Topix closed 1.5 percent higher at 1,984.16.

Nikkei heavyweight SoftBank Group gained 1.8 percent and Uniqlo brand clothing store operator Fast Retailing rose 0.9 percent, while chip testing equipment maker Advantest spiked 4.7 percent.

Exporters ended broadly higher, with Toyota Motor rising 2.5 percent and Sony gaining 2 percent. In economic news, Tokyo's consumer prices declined at a slower pace in March, a government report showed.

Australian markets rose for the third straight day on economic recovery hopes. The benchmark S&P/ASX 200 Index rose 33.60 points, or 0.5 percent, to 6,824.20, marking its highest close in eight sessions as bond yields retreated. The broader All Ordinaries index ended up 40.50 points, or 0.6 percent, at 7,063.10.

Telstra rallied 2.4 percent after the telecommunications giant said it would scrap its New Zealand listing. Energy stocks finished broadly higher as oil prices bounced back from steep losses in the previous session.

Santos rose 1.1 percent after announcing it has restarted production at its Ningaloo Vision floating production and storage vessel following scheduled maintenance.

Mining heavyweight climbed 2.2 percent, while banks ANZ, Westpac and NAB rose about 1 percent. Rare earths miner Lynas surged 4.3 percent after reporting a better-than-expected financial result.

Wealth manager AMP gained 0.8 percent after denying reports that CEO Francesco De Ferrari had resigned.

News Corp. jumped 2 percent after it acquired digital business news outlet Investor's Business Daily for US$275 million from O'Neil Capital Management.

Seoul stocks gained ground for the second straight day as oil steadied, the vaccine drive picked up pace and a survey showed a measure of consumer confidence in the country improved in March.

The benchmark Kospi jumped 32.68 points, or 1.1 percent, to 3,041.01 as foreigners ended their five-day selling streak. Chipmaker SK Hynix advanced 1.5 percent and chemical firm LG Chem added 1.8 percent.


European stocks are broadly higher on Friday as strong U.S. economic data and progress on vaccination rollouts helped support hopes of an economic recovery.

Underlying sentiment remained cautious amid rising Covid-19 cases across the continent, with the European Commission warning that the European Union is at the start of a third wave of the pandemic.

While the French CAC 40 Index has risen by 0.4 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both up by 0.7 percent.

Sika AG shares have advanced. The Swiss specialty chemicals company said that it has acquired the flooring adhesives business of DriTac, a U.S.-based floor covering adhesives company with an especially strong position in wood floor bonding.

Banco Santander S.A. has also climbed. The Spanish bank said that it plans to make a cash offer to buy the remaining 8.3 percent stake in its Mexican unit for a total consideration of 550 million euros. Banco Santander currently owns 91.7 percent of Santander México.

Miners BHP, Rio Tinto, Anglo American, Antofagasta and Glencore have also surged, helped by higher commodity prices.

Oil and gas company BP Plc and Royal Dutch Shell have also risen as oil prices rebound on the news that the Suez Canal may stay blocked for at least another week, squeezing global supply.

Engineering company Smiths Group has also jumped after reporting a better than expected interim profit and issuing an upbeat forecast for the second half of the fiscal year.

Stagecoach Group has also rallied. The transport group noted that since an interim results announcement, it has seen further positive cash flow (excluding movements in borrowings) and continues to have available liquidity of over 850 million pounds.

Oxford Instruments, a provider of technology and tools for research and industry, has also soared. The company said that it expects revenues for fiscal 2020/21 to be marginally ahead of last year, inclusive of a small negative impact from currency effects.

In economic news, German business confidence improved more than expected in March, survey results from the ifo Institute showed. The business confidence index rose to 96.6 in March from revised 92.7 in February. The index was forecast to climb to 93.2.

The current conditions climbed to 93.0, which was above economists' forecast of 91.3. Likewise, the expectations indicator advanced to 100.4 versus forecast of 95.0.

A separate report showed that U.K. retail sales recovered in February, largely driven by non-food store sales.

Retail sales volume including auto fuel logged monthly growth of 2.1 percent, in contrast to January's 8.2 percent decrease. The pace of growth matched economists' expectations.

On a yearly basis, retail sales fell at a slower pace of 3.7 percent after decreasing 5.9 percent in January. This was the second consecutive drop in sales.

U.S. Economic Reports

After reporting a substantial increase in U.S. personal income in the previous month, the Commerce Department released a report on Friday showing personal income pulled back sharply in the month of February.

The Commerce Department said personal income plunged by 7.1 percent in February after skyrocketing by an upwardly revised 10.1 percent in January.

Economists had expected personal income to plummet by 7.3 percent compared to the 10.0 percent spike originally reported for the previous month.

The sharp pullback in personal income primarily reflected a decrease in government social benefits following the distribution of $600 stimulus checks in January.

The report also showed personal spending slumped by 1.0 percent in February after soaring by an upwardly revised 3.4 percent in January.

Economists had expected personal spending to decrease by 0.7 percent compared to the 2.4 percent jump originally reported for the previous month.

Meanwhile, a reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth slowed to 1.4 percent in February from 1.5 percent in January.

At 10 am ET, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of March. The consumer sentiment index is expected to be upwardly revised to 83.6 from 83.0.

Stocks In Focus

Shares of L Brands (LB) are seeing significant pre-market strength after the Victoria’s Secret parent raised its first quarter earnings guidance due to improved sales trends.

Business software company Progress Software (PRGS) may also see initial strength after reporting better than expected fiscal first quarter results and raising its full-year guidance.

On the other hand, shares of MSG Networks (MSGN) may come under pressure after the sports media company agreed to be acquired by Madison Square Garden Entertainment at a discount to its closing price on Thursday.
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