(Bloomberg) — U.S. equity futures rose with stocks as a recovery in battered high-growth shares gained momentum. Treasury yields steadied as fears about the impact of tightening Fed policy eased.
Contracts on the Nasdaq 100 pointed to more gains for the index after it snapped back from a four-day skid that pushed it more than 8% below a November record. Technology stocks led an advance of 1% in the Stoxx Europe 600 Index. In the U.S. premarket, Tesla Inc. climbed more than 1%.
The moves reversed days of selling of pricey stocks driven by bets the Federal Reserve will accelerate rate liftoff. With tighter policy priced in, investors are now focusing on upcoming earnings and dip-buying prospects.
“We are looking for opportunities to raise our weighting in stocks in 2022,” according to Luca Paolini, chief strategist at Pictet Asset Management, whose firm has a neutral stance on equities. “The global recovery remains resilient, thanks to a strong labor market, pent-up demand for services and healthy corporate balance sheets.”
Read more: Goldman Sachs to UBS Wealth Strategists Say Buy Dip in Stocks
Fears that tighter policy will stall growth are also ebbing amid confidence the U.S. economy is strong enough to sustain higher borrowing costs.
“The pendulum may have swung too far to the hawkish side, leaving room for ‘growth’ to recoup some of its recent underperformance,” Julien Lafargue, chief market strategist at Barclays Private Bank, said by email.
Swaps indicate the Fed’s target will be 88 basis points higher by the end of this year — seen by many as a sign the market is baking in three hikes, plus the possibility of a fourth — starting as soon as March. The Fed is under pressure to quell U.S. consumer-price inflation anticipated to have increased further in December to 7.1%, the fastest pace in almost four decades, according to the latest reading due Wednesday.
Read more: The Clashing Forces That Will Drive U.S. Inflation in 2022
Elsewhere, Bitcoin recovered to around $42,000 after dipping below $40,000, putting it on track for its worst start to a year since the earliest days of digital currencies. Oil edged up.
Here are some key events this week:
- Fed Chair Jerome Powell’s confirmation hearing in the Senate Banking Committee on Tuesday.
- Kansas City Fed President Esther George and St. Louis Fed President James Bullard speak on Tuesday.
- EIA crude oil inventory report on Wednesday.
- China PPI, CPI on Wednesday.
- U.S. CPI, Fed Beige Book on Wednesday.
- U.S. initial jobless claims, PPI on Thursday.
- U.S. Senate Banking Committee hearing for Lael Brainard, nominated as Fed vice-chair on Thursday.
- Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker,
- Chicago Fed President Charles Evans speak on Thursday.
- Bank of Korea policy decision and briefing on Friday.
- Wells Fargo, Citigroup, JPMorgan due to report earnings on Friday.
- U.S. business inventories, industrial production, University of Michigan consumer sentiment, retail sales on Friday.
- New York Fed President John Williams speaks Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.3% as of 7:54 a.m. New York time
- Futures on the Nasdaq 100 rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 1%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1334
- The British pound was little changed at $1.3581
- The Japanese yen fell 0.2% to 115.48 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.76%
- Germany’s 10-year yield declined one basis point to -0.05%
- Britain’s 10-year yield declined three basis points to 1.16%
Commodities
- West Texas Intermediate crude rose 1.5% to $79.42 a barrel
- Gold futures rose 0.4% to $1,806.10 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
