Tuesday, July 5

Wall Street stretches Christmas rally and futures rise pre-open

Wall Street indices rise in the early 2022 after leaving a 2021 record stretching the Christmas rally. And it is worth remembering that this rally, when it occurs – 4 out of 5 years – during the last five sessions of the year and and the first two of the year that begins, in theory, complies with this tradition.

At this time, Dow Jones futures are down 0.54%, over 36,422 points. The S&P 500 rose slightly more than 0.6%, over 4,789 integers, while the Nasdaq rose 0.75%, to 16,443 points. The Russell 2000 scores 0.93% out of 2,263 points.

Tesla is helping the market get some initial momentum, rising 6.7% in pre-market trading after the electric vehicle company reported 308,600 deliveries in the fourth quarter, beating expectations.

The values ​​related to the opening of the economies, airlines and hotels, rise in the pre-opening. Alaska Air scores 2.3%, while Carnival and Norwegian Cruise Lines they go up about 2% each. Along with Tesla, the big automakers also saw their shares rise, with Ford Motor and General Motors up 1.6% each.

The new year begins with continued uncertainty surrounding the Covid-19 pandemic. The rise of the omicron variant contributed to the cancellation of thousands of flights during the Christmas season and has prompted some businesses and schools to consider temporary closures. Several of the major Wall Street banks have asked their employees to work from home during the first weeks of January.

With the main developed economies in full deceleration as a consequence of the latest wave of the pandemic and with inflation having reached its highest levels in decades in most of these economies in December, investors should assess the effect that all this may end up having. in what for Link Securities is the key to the progress of the stock markets: in the expectations of results of listed companies.

In this environment inflation will be the variable that, with its behavior, will not only determine the behavior of the different sectors / stocks on western stock markets but, most likely, that of equities as a whole, at least during the first half of 2022. “If“ high inflation ”persists or increases in developed economies, this may accelerate the withdrawal of stimulus plans by the main central banks, a process that already it is underway ”, assures Juan José Fdez – Figares, Link Securities analyst. .

… after a year of highs on Wall Street

Some prospects for 2022 that come after the Wall Street indices ended the last session of the year in negative, although they closed the year with a new record despite the persistent headwinds of Covid -19. The Dow Jones closed at 36,388 points; the S&P 500 closed at 4,766 integers while the Nasdaq begins 2022 from the 15,644 points at which it closed the year. An exercise in which the three indices closed with a double-digit return in the heat of an economy that has recovered strongly since 2020 of confinements by Covid. The S&P 500 closed 2021 with a return of 26.89%, marking maximum gains in three years, while the Nasdaq and the Dow Jones also closed with gains of 21.39% and 18.73%, respectively.

“2021 was another banner year for US equity markets,” Chris Haverland of the Wells Fargo Investment Institute said in a note. “The markets were supported by very accommodative fiscal and monetary policies.” Strong corporate earnings also boosted US stocks, Haverland said. The estimated annual growth rate of earnings for 2021 is 45.1%, according to FactSet. That would mark the highest annual earnings growth rate for the index since FactSet began tracking the metric in 2008.

“The economic and earnings rebound that began in 2020 carried over to 2021, lifting equity markets to all-time highs. While returns in 2020 were driven by the expansion of the price-earnings multiple, returns in 2021 were driven because of earnings growth, “says Haverland.

ISM and PMI Manufacturing, employment and FED minutes on the agenda for the week

At the macro level. Between today and tomorrow, the final readings for December of the leading indices of manufacturing sector activity (PMIs and US ISM) will be published, while the same indices will be published between Wednesday and Thursday, but for the services sector. These indicators will allow investors to get a clearer idea of ​​the true impact that the latest wave of the pandemic is having and the restrictive measures adopted by many authorities to try to combat it in the private activity of the main western developed economies.

All in a week in which eOn Friday, the non-agricultural employment data for the month of December will be known, although earlier, on Wednesday, the FED will release the Minutes of the last meeting it held in December in which it will be interesting to know the different positions of the members of the FOMC regarding the first rate hike.

In the raw materials market, the price of Crude Oil rises more than 0.9%, over $ 75.92, while Gold falls 0.12%, over $ 1,826.

The EUR / USD moves slightly below $ 1.1363 while the Bitcoin gives slightly, to $ 47,261.

In the fixed income market, the yield of the US ten-year bond moves at 1.5120%


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