Five things you need to know before the market opens on Monday January 9:
1. -- Stock Futures Edge Higher With Inflation Data In Focus
U.S. equity futures edged higher Monday, while the dollar extended its decline on foreign exchange markets, as investors looked to build on last week's jobs-lead rally with and eye on key inflation data expected over the coming days.
Friday's better-than-expected job report, which showed a firm 223,000 gain in net new positions alongside moderating wage growth, sparked the strongest single-day gain for the S&P 500 in more than a month, with Treasury yields moving sharply lower and the dollar shedding gains against its global peers as investors re-set Federal Reserve rate hike expectations amid hopes of slowing inflation.
The first contraction for the ISM services sector survey, a crucial reading of activity in the economy's most important growth driver, added to Friday's gains as bets on a smaller 25 basis point rate hike from the Fed on February 1 jumped to around 75%, according to the CME Group's FedWatch.
Growth worries will temper some of those gains heading into the start of the week, with investors eyeing Thursday's December inflation report and the start of the unofficial start of the third quarter earnings season on Friday, but a weaker dollar and softer Treasury bond yields, linked to a brightening inflation forecast, as giving U.S. and global stocks an early boost.
Benchmark 2-year Treasury note yields were last seen holding at 4.283% in overnight trading, with 10-year notes falling to 3.608%, while the U.S. dollar index, which tracks the greenback against a basket of its global peers, fell 0.28% to 103.590, near to the lowest levels since late June.
In overseas markets, China's reopening of the Hong Kong border after more than three years, alongside the loosening of further Covid-era restrictions on travel and business, lifted Asia stocks firmly higher, with the region-wide MSCI ex-Japan index rising 2.43% into the close of trading.
Oil prices jumped, as well, on bets that re-opening moves would ignite deeper commodities demand, while copper prices traded as the highest levels in six months.
On Wall Street, futures tied to the S&P 500 are priced for a 13 point opening bell gain while those linked to the Dow Jones Industrial Average are set for an 80 point bump. The tech-focused Nasdaq, which is on pace for a fifth consecutive weekly decline, is looking at a 45 point gain.
2. -- Week Ahead: Powell Speech, Earnings, CPI On Deck
Federal Reserve Chairman Jerome's Powell's speech at a central banking conference in Sweden, just two days prior to a key reading on domestic inflation, will highlight a relatively muted week of economic releases on Wall Street heading into the start of the fourth quarter earnings season.
Powell, who is slated to address the Sveriges Riksbank International Symposium on Central Bank Independence in Stockholm at 9:00 am EST Tuesday, may address last week's 'goldilocks' jobs report that showed firmer-than-expected hiring in December paired with moderating wage growth.
If Powell, who has countered market expectations for easing rate hikes over the past several months, allows the current consensus to carry over into Thursday's inflation reading, stocks have a chance to build significant gains over the two weeks between now and the Fed's February 1 policy decision.
Thursday's CPI reading is expected to show headline inflation falling to 6.5% in December, from 7.1% in November, with so-called core consumer price pressures -- which strip out food and energy costs -- easing to an annualized rate of 5.7%.
Bank earnings Friday will unofficially kick-off the fourth quarter earnings season, with updates expected from JPMorgan (JPM), Citigroup (C), Wells Fargo (WFC) and Bank of America (BACXL) .
3. -- Goldman Sachs To Being Job Cuts Later This Week
Goldman Sachs Group (GS) shares nudged higher in pre-market trading amid reports that the investment bank is set to begin a steep round of job cuts later this week.
Multiple media reports suggest Goldman is likely to eliminate around 3,200 positions, the bulk of them centered around its trading and banking divisions, following a traditional end-of-year review lead by CEO David Solomon.
Solomon told employees in late December in a company-wide memo that a "variety of factors impacting the business landscape, including tightening monetary conditions that are slowing down economic activity" are weighing on the bank's prospects and warned that a "headcount reduction will take place in the first half of January".
Goldman shares were marked 0.26% higher in pre-market trading to indicate an opening bell price of $349.00 each.
4. -- Macy's Shares Slump As Retailer Cautions On Holiday Spending
Macy's (M) shares slumped lower in pre-market trading after the retailer cautioned that its fourth quarter sales are likely to come in at the lower end of previous forecasts, while noting that consumers are likely to remained pressured heading into the first half of the year.
In a late Friday investor update ahead of a weekend industry conference in Orlando, Macy's CEO Jeff Gennette said lulls in non-peak holidays sales were "deeper than anticipated", even as Black Friday and Christmas week activity were either in-line or ahead of forecasts.
Macy's sees fourth quarter earnings hitting its previous forecast of $1.47 to $1.67 per share, with sales at the lower end of its $$8,161 million to $8,401 million range.
Macy's shares were marked 3.75% lower in pre-market trading Monday to indicate an opening bell price of $21.30 each.
5. -- Brazil President Lula Vows To Investigate Capital Riots
Authorities in Brazil began their investigation into an-hours long takeover of the Supreme Court, Congress and the presidential palace Sunday by thousands of protestors and supporters of ousted former President Jair Bolsonaro.
President Luiz Inacio Lula da Silva, who won a hotly contested election late last year, vowed to find and punish the leaders of the anti-democracy demonstrations, which paralyzed the capital of Brasilia with the alleged support of military police controlled by pro-Bolsonaro Governor Ibaneis Rocha. Several hundreds of the tens of thousands of demonstrators were arrested in the storming of the capital buildings in a violent event that bore an eerie resemblance to the the January 6 riots in Washington.
Federal police are now in control of the city, under Lula's late-Sunday decree, while Supreme Court Justice Alexandre de Moraes ordered Rocha to be removed from office for 90 days while his role in the demonstrations is investigated.
“There’s no precedent for this in the history of our country,” Lula said in a nationally-televised address. “We’re going to find out who the financial backers are.”
