Dow futures trade flat as investors await retail sales, Fed minutes

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Stock-index futures saw muted action Wednesday as investors await a round of data that could offer further clues about the health of the COVID-stricken economy and the Federal Reserve’s near-term monetary-policy strategy.

How are stock benchmarks performing?

  • Futures for the Dow Jones Industrial Average were trading 23 points higher near 31,481, a gain of less than 0.1%.
  • S&P 500 index futures were up 2 points to reach 3,929.50, also less than 0.1%.
  • Nasdaq-100 futures were down 16 points, or 0.1%, at 13,752.

On Wednesday, the Dow ended at a record, but the S&P 500 and the Nasdaq Composite indexes snapped a two-day string of gains to end lower.

What’s driving the market?

Investors will be watching for data on U.S. retail sales figures for January, the latest read on the health of the consumer amid the coronavirus pandemic. Signs of improvement could help to soothe some concerns after holiday sales showed weakness as COVID cases spiked. Economists estimate sales rose 1.1% for January, following a decline of 0.7% in the prior month, according to Econoday.

The Wall Street Journal reported that spending by consumers making less than $60,000 a year jumped by more than 20% in the week ended Jan. 10, suggesting that consumer spending might be ready to see a strong uptick boosted by the government’s COVID aid checks.

Video: Inflation expectations and narrowing credit spreads are driving stocks: Credit Suisse (CNBC)

Inflation expectations and narrowing credit spreads are driving stocks: Credit Suisse
What to watch next

The retail report is due out at 8:30 a.m. Eastern, along with a final reading of producer prices.

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Meanwhile, the market is wrestling with rising bond yields on hope of better economic times ahead given the prospect of more fiscal stimulus from Congress and declining coronavirus cases. On Tuesday, the 10-Treasury note hit a yield near 1.30%, its highest level since Feb. 26, according to Dow Jones Market Data.

“Markets are showing small losses today as mild concerns about rising government bond yields have encouraged some traders to trim their exposure to equities,” said David Madden, market analyst at CMC Markets UK.

“Recently, the mood in global equity markets has been very bullish as multiyear highs and in some cases, all-time highs were set,” Madden wrote. “Buying was being fueled by the hopes of more stimulus spending by the Biden government, also playing into the mix was the view that successful vaccine roll-outs should help re-open economies, and in turn, economic activity will rise later this year,” referring to President Joe Biden’s $1.9 trillion COVID aid proposal. 

Meanwhile, frigid weather is posing problems in much of the U.S., including Texas, leaving millions without power and nearly 75% of the Lower 48 states under snow cover, WSJ wrote, citing the National Oceanic and Atmospheric Administration’s National Snow Analysis daily report.

In other economic reports, investors will watch for minutes of the Federal Reserve’s January policy meeting to be released at 2 p.m. and further clues about how the central bank will react to economic improvement on the back of greater fiscal spending and effective vaccine rollouts.

Before that report, a report on industrial production is due at 9:15 a.m., and a reading of business inventories and a report on the housing market are set to be released at 10 a.m.

Among Fed speakers on tap today, Federal Reserve Bank of Richmond President Thomas Barkin is due to speak at 9 a.m., Boston Fed President Eric Rosengren is said to speak an hour later and Dallas Fed President Robert Kaplan is set to talk later Wednesday after 6 p.m.

Which stocks are in focus?

  • Shares of Verizon Communications Inc. VZ and Chevron Corp. CVX rallied to pace the Dow after Warren Buffett’s Berkshire Hathaway Inc. BRK.B disclosed that it acquired large stakes in the companies during the fourth quarter. 
  • Canadian cannabis company Sundial Growers IncSNDLhas filed a shelf registration with the Securities and Exchange Commission to issue up to $1 billion of securities over time.
  • Medical device maker Medtronic PLC MDT said Wednesday it is voluntarily recalling unused Valiant Navion thoracic stent graft system and informing doctor to immediately stop using the device until further notice.
  • Energy Transfer LP ET announced Wednesday an agreement to buyEnable Midstream Partners LP ENBL in a stock deal valued at $7.2 billion.
  • Shares of Hilton Worldwide Holdings Inc. HLT dropped in premarket trading Wednesday, after the hotel operator reported a surprise fourth-quarter loss and revenue that fell more than forecast, as the rise in COVID-19 cases and tightening travel restrictions disrupted the positive momentum seen in the summer and fall. 

What are other assets doing?

  • The yield on the 10-year Treasury note  ticked down about 1 basis point 1.302%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, 0.38%, a measure of the currency against a basket of six major rivals, was up 0.4%.
  • Oil futures edged higher, with the U.S. benchmark  up 1.4% to $60.91 a barrel, pushing past the key $60 level. Gold futures  slumped 0.5% to about $1,789.40.
  • The pan-European Stoxx 600 index SXXP fell 0.3% and London’s FTSE 100 stock index UKX, was off 0.2%.
  • Markets in Hong Kong closed 1.1% higher, while Japan’s Nikkei 225 index NIK shed 0.6%.
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