Stock futures pointed to a slightly lower open Wednesday morning.
The three major indexes ended mixed during the regular session a day earlier, with the S&P 500 and Dow higher while the Nasdaq sank as tech stocks came under renewed pressure. Energy stocks – the laggards throughout 2020 – jumped on Tuesday as crude oil prices rose above $53 per barrel to a 10-month high. And the 10-year Treasury yield, which had languished below 1% for most of last year, also held near its highest level since March.
With the S&P 500 just 0.6% below its recent all-time closing high, investors have largely looked through the recent political turmoil in Washington, D.C. The House of Representatives is preparing to vote Wednesday over whether to impeach President Donald Trump for a second time for “incitement of insurrection” after last week’s riots at the U.S. Capitol. Any impeachment proceedings, however, could pull focus away from President-elect Joe Biden’s agenda in his first days in office – and importantly for markets, potentially impact the timeline for the passage of another stimulus package, some strategists noted.
“I think Joe Biden deep down in – he might not say this in public – but I think deep down in he’s thinking, do I really need this kind of distraction?” Greg Valliere, AGF Investments chief policy strategist, told Yahoo Finance on Tuesday. “He has to get his entire cabinet confirmed, he wants to move quickly on a stimulus bill, we’ve got COVID, he has regulations he may want to undo. So I think that an impeachment fight would be a huge distraction for Biden.”
Strategists and traders have overwhelmingly assumed that another large stimulus package will come about under the Biden administration and unified Democratic government. These prospects, along with the Federal Reserve’s still very easy accommodative monetary policy posturing, have helped buoy equities even given the ongoing pandemic and slow vaccine roll-out to date. On Tuesday alone, both St. Louis Fed President James Bullard and Boston Fed President Eric Rosengren said in separate public remarks that they believed it was too soon to even begin talking about shrinking the size of the central bank’s asset purchases, which are currently taking place at a $120 billion monthly pace.
“We’re looking at a market that’s never seen this amount of stimulus before, that’s never seen low rates for years on top of fiscal stimulus, on top of $120 billion of QE [quantitative easing], on top of more stimulus,” Tom Essaye, founder Sevens Report Research, told Yahoo Finance on Tuesday. “There is a positive story in stocks and right now that’s pushing markets higher. The problem of course is what if something goes wrong, but that’s not something the market’s interested in right now.”
8:30 a.m. ET: Consumer prices accelerated in December as energy prices jumped
Consumer prices grew at a faster rate in December over November as energy prices picked back up at the end of the year.
The Bureau of Labor Statistics’ Consumer Price Index (CPI) rose 0.4% in December following November’s 0.2% monthly rise. This matched consensus economist expectations, according to Bloomberg data.
An 8.4% jump in the index tracking gasoline prices accounted for more than 60% of the overall increase in December, the BLS added. Other categories also saw prices firm, including prices for food both at home and at restaurants, which both rose 0.4% in December after declining in November.
Excluding more volatile food and energy prices, the CPI was up 0.1% in December month-over-month, slowing from November’s 0.2% increase.
Over last year, the headline CPI rose 1.6% to match expectations.
7:26 a.m. ET: Mortgage applications surge in first week of January as still-low rates boost demand
U.S. mortgage applications jumped 16.7% during the week ended January 8 over the prior week, according to the Mortgage Bankers Association, as low interest rates and an improving economic outlook amid the vaccine roll-out spurred demand.
Beneath the headline increase, refinances jumped 20% week-over-week and were higher by 93% versus the same week one year ago. Purchase applications also rose but more modestly, posting an 8% week-on-week rise. The unadjusted purchases index was also 10% high year-over-year.
“Booming refinance activity in the first full week of 2021 caused mortgage applications to surge to their highest level since March 2020, despite most mortgage rates in the survey rising last week,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “The expectation of additional fiscal stimulus from the incoming administration, and the rollout of vaccines improving the outlook, drove Treasury yields and rates higher.”
7:19 a.m. ET Monday: Stock futures dip after Tuesday’s mixed session
Here were the main moves in markets, as of 7:19 a.m. ET Wednesday:
S&P 500 futures (ES=F): 3,789.00, down 5.5 points or 0.14%
Dow futures (YM=F): 30,946.00, down 28 points or 0.09%
Nasdaq futures (NQ=F): 12,882.75, down 7.5 points or 0.06%
Crude (CL=F): +$0.19 (+0.36%) to $53.40 a barrel
Gold (GC=F): +$9.50 (+0.52%) to $1,853.70 per ounce
10-year Treasury (^TNX): -1.1 bps to yield 1.167%
6:04 p.m. ET Tuesday: Stock futures open slightly lower
Here were the main moves in markets, as of 6:04 p.m. ET Tuesday:
S&P 500 futures (ES=F): 3,791.00, down 3.5 points or 0.09%
Dow futures (YM=F): 30,950.00, down 24 points or 0.08%
Nasdaq futures (NQ=F): 12,875.00, down 15.25 points or 0.12%
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