(Bloomberg) — U.S. futures rose as data signaled a strengthening recovery, while dip buyers stepped in following a selloff spurred by a hawkish Federal Reserve.
Contracts on the S&P 500 climbed after reports showed the U.S. economy expanded more than forecast in the fourth quarter, while jobless claims fell last week. Apple Inc. advanced ahead of its earnings report due after market close. McDonald’s Corp. fell after disappointing results and Intel Corp. dropped on a weak profit forecast. Two-year Treasuries extended losses, while the dollar rose.
Investors are weighing policy-tightening expectations against the economic rebound, after Fed Chair Jerome Powell on Wednesday endorsed interest-rate liftoff in March and opened the door to more frequent, potentially larger hikes than expected.
Powell’s Hawkish Surprises Mean Treasuries Rout Flattens Curve
“As supply constraints ease, inflation will fall through 2022, and so monetary tightening pressures will fade,” wrote Seema Shah, chief strategist at Principal Global Investors. “This tightening pace should neither spook markets nor disrupt the economic expansion.”
Global stocks are still heading for their worst month since the pandemic roiled markets in 2020. And traders are boosting bets for higher borrowing costs, pricing in five rate hikes from the Fed and another four from the Bank of England.
Traders Ramp Up Bets to See Five Federal Reserve Hikes This Year
Investors are also keeping an eye on geopolitical tension, after Russia criticized U.S. and NATO security proposals aimed at defusing a crisis over Ukraine, while still leaving the door open to further talks.
What to watch this week:
- Euro zone economic confidence, consumer confidence Friday.
- U.S. consumer income, University of Michigan consumer sentiment Friday.
For more market analysis, read our MLIV blog.
Stocks
- Futures on the S&P 500 rose 0.8% as of 8:59 a.m. New York time
- Futures on the Nasdaq 100 rose 1%
- Futures on the Dow Jones Industrial Average rose 0.5%
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro fell 0.8% to $1.1151
- The British pound fell 0.6% to $1.3382
- The Japanese yen fell 0.6% to 115.38 per dollar
Bonds
- The yield on 10-year Treasuries declined three basis points to 1.83%
- Germany’s 10-year yield advanced three basis points to -0.05%
- Britain’s 10-year yield advanced four basis points to 1.23%
Commodities
- West Texas Intermediate crude rose 1.1% to $88.27 a barrel
- Gold futures fell 1.7% to $1,801 an ounce
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