Key Takeaways
- • Tech stocks rallied this week ahead of the U.S. Federal Reserve's Wednesday policy decision, with Nasdaq futures up 0.4% pre-open and already up 2% for the week, according to The Canadian Press.
- • Markets broadly expect the Fed to hold its benchmark rate steady after the central bank hiked the fed funds rate last month for the first time in three years.
- • Higher energy prices tied to Middle East conflict are intensifying inflation pressure and complicating the Fed's stance, with Brent crude at $111.38 a barrel.
- • Hyperscalers Microsoft and Alphabet report quarterly earnings after the bell Wednesday, with Amazon and Intel reporting Thursday.
- • The 10-year Treasury yield edged up 0.25% to 5.0%, a key inflation indicator for the Fed.
Summary
Tech stocks have surged this week ahead of the Federal Reserve's Wednesday meeting, with markets anticipating no change to the U.S. benchmark interest rate. The rapid-growth tech sector has been fueled by easy access to credit, and futures for the Nasdaq, already up two per cent for the week, rose 0.4 per cent before the opening bell. S&P 500 futures edged up 0.1 per cent, while Dow Jones Industrial Average futures fell 144 points, or 0.3 per cent.
The Fed faces a difficult position. The central bank hiked the fed funds rate last month for the first time in three years in an effort to slow inflation, but higher energy prices stemming from the Middle East conflict are intensifying inflationary pressures. U.S. benchmark crude rose more than two per cent early Wednesday after an attack by Iran-backed Houthi rebels on a major Saudi Arabian refinery earlier in the week, and Brent crude was up almost two per cent to $111.38 a barrel.
Earnings are a focus this week. Hyperscalers Microsoft and Alphabet post quarterly results after the bell Wednesday, while Amazon and Intel report Thursday. Alphabet was up almost two per cent early, and Microsoft was essentially flat. Memory chipmaker SK Hynix jumped 11.4 per cent to its highest level in two weeks after reporting a record operating profit of 83.3 trillion won (US$62.8 billion) for the last quarter, up nearly sevenfold from a year earlier and ahead of market estimates. Cryptocurrency platform Robinhood fell sharply after quarterly profit missed expectations, and Stellantis rose six per cent after reaffirming its annual guidance despite heavy turnaround costs.
Elsewhere, Germany's DAX edged up less than 0.1 per cent to 25,598.39, France's CAC 40 declined 0.1 per cent to 7,876.05, and Britain's FTSE 100 fell 0.3 per cent to 10,656.49. South Korea's Kospi surged 6.6 per cent to close at 6,012.44. The Bank of Japan begins a two-day policy meeting Thursday, with markets expecting its benchmark rate to be unchanged. Treasury yields were relatively steady ahead of the Fed decision, and the U.S. dollar slipped to 157.92 Japanese yen from 157.95 yen, while the euro traded at $1.1128.
The Fed faces a difficult position. The central bank hiked the fed funds rate last month for the first time in three years in an effort to slow inflation, but higher energy prices stemming from the Middle East conflict are intensifying inflationary pressures. U.S. benchmark crude rose more than two per cent early Wednesday after an attack by Iran-backed Houthi rebels on a major Saudi Arabian refinery earlier in the week, and Brent crude was up almost two per cent to $111.38 a barrel.
Earnings are a focus this week. Hyperscalers Microsoft and Alphabet post quarterly results after the bell Wednesday, while Amazon and Intel report Thursday. Alphabet was up almost two per cent early, and Microsoft was essentially flat. Memory chipmaker SK Hynix jumped 11.4 per cent to its highest level in two weeks after reporting a record operating profit of 83.3 trillion won (US$62.8 billion) for the last quarter, up nearly sevenfold from a year earlier and ahead of market estimates. Cryptocurrency platform Robinhood fell sharply after quarterly profit missed expectations, and Stellantis rose six per cent after reaffirming its annual guidance despite heavy turnaround costs.
Elsewhere, Germany's DAX edged up less than 0.1 per cent to 25,598.39, France's CAC 40 declined 0.1 per cent to 7,876.05, and Britain's FTSE 100 fell 0.3 per cent to 10,656.49. South Korea's Kospi surged 6.6 per cent to close at 6,012.44. The Bank of Japan begins a two-day policy meeting Thursday, with markets expecting its benchmark rate to be unchanged. Treasury yields were relatively steady ahead of the Fed decision, and the U.S. dollar slipped to 157.92 Japanese yen from 157.95 yen, while the euro traded at $1.1128.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.