Dow futures edge lower ahead of economic data as Fed prepares to begin 2-day meeting

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Stocks were trading on either side of unchanged as investors sifted through U.S. February retail sales figures and other economic data ahead of the start of a two-day Federal Reserve policy meeting.

What are major benchmarks doing?
  • The Dow Jones Industrial Average DJIA, -0.34% was off 36.05 points, or 0.1%, at 32,917.41.
  • The S&P 500 SPX, +0.14% edged up 4.25 points, or 0.1%, at 3,973.19.
  • The Nasdaq Composite COMP, +0.87% gained 84.04 points, or 0.6%, to trade at 13,543.75.

On Monday, stocks ended on a positive note after flipping between modest gains and losses, with the Dow logging a fourth straight record close, its longest such streak since December 2017, according to Dow Jones Market Data. The S&P 500 also closed at a record, rising 0.6%, while the Nasdaq Composite advanced 1%.

What’s driving the market?

Stocks overall continue to press higher on expectations vaccine rollouts and another $1.9 trillion dose of COVID-19 relief spending by the U.S. government will fuel an acceleration in economic growth and corporate profits in 2021.

“The accelerated pace of vaccinations in America and the imminent spending boom seem to have reawakened a thirst for risk-taking among investors, who are front-running what will probably be a stellar summer in economic data,” said Marios Hadjikyriacos, investment analyst at XM, in a Tuesday note.

“Even the risk of a more hawkish Fed tomorrow appears to have been discounted by market participants,” he said. “Since traders have already priced in an earlier timeline for rate increases, even if policy makers bring forward their rate forecasts to signal a hike in 2023 through the famous ‘dot plot’, that would still be aligned with market pricing and therefore not much of a shock.”

Read: Fed to stay dovish this week as Powell channels his inner Gary Cooper calm

Also see: Investors say regulatory relief for bank capital rules could ease pressure on bond market

The tech-heavy Nasdaq is recovering as U.S. Treasury yields slip. The recent backup in yields, which saw the rate on the 10-year note rise for six straight weeks, had weighed on the index as it sparked a rotation away from the most highflying stocks of the pandemic toward more cyclically sensitive stocks expected to gain from a wider economic reopening.

The Fed’s two-day meeting was set to get under way Tuesday morning. When it concludes Wednesday, investors expect no changes in policy but will be eager to see updated projections on the economic outlook and the path for interest rates, while Chairman Jerome Powell’s news conference promises to me to be the key economic event of the week.

Market Extra: Fed should ‘switch’ up its playbook and buy more Treasurys, fewer mortgage bonds, urge analysts

U.S. investors have brushed off a sluggish European vaccine rollout, though officials have warned that it was premature to declare victory.

Key Words:They thought that they were home free and they weren’t.’ Fauci says COVID-19 resurgence in Europe is a warning for the U.S.

Investors appeared to largely brush off data that showed U.S. retail sales fell 3% in February, with business expected to pick up in March and April as Americans spend $1,400 stimulus checks. Sales had soared a revised 7.6% in January after the government sent out $600 stimulus checks before President Trump left office.

“In some ways, the data is a bit irrelevant in the sense that the economy is going to be boosted by the new fiscal stimulus, and funds have already begun to be transferred,” said Marc Chandler, managing director at Bannockburn Global Forex, in a note.

Separately, the Fed reported that February industrial production fell 2.2%.

The March National Association of Home Builders index is due at 10 a.m.

Which companies are in focus?
  • Moderna Inc. MRNA, +6.31% on Tuesday said that it has dosed the first pediatric participants of its KidCOVE Phase 2/3 study of its COVID-19 vaccine candidate, which is being tested for children aged 6 months to less than 12 years. Moderna shares rose 1.7%.
  • Nikola Corp. NKLA, -6.92% filed to sell $100 million worth of shares late Monday. Shares fell 4%.
  • Ford Motor Co. F, -3.07% announced Tuesday plans to offer $2 billion in convertible senior notes due 2026, in a private placement to qualified institutional buyers. Ford shares were off 0.5%.
  • Shares of Norwegian Cruise Line Holdings Ltd. NCLH, -3.93% fell 1.4% after the company said it was extending the suspension of its global cruise voyages by another month, through June 30
  • Shares of GameStop Corp. GME, -15.69% were down more than 8% after the popular meme stock dropped 16.8% on Monday. Shares of AMC Entertainment Holdings Inc. AMC, -7.83%, another popular holding, fell 5.6% after soaring 25.8% on Monday.
What are other markets doing?
  • The yield on the 10-year Treasury note TMUBMUSD10Y, 1.597% fell 1.7 basis points to 1.594%.
  • The ICE U.S. Dollar Index DXY, +0.09%, a measure of the U.S. currency against a basket of six major rivals, was flat.
  • Oil futures were lower, with the U.S. benchmark CL.1, -1.85% off 1.9% at $64.18 a barrel.
  • Gold futures GC00, +0.17% edged higher, rising 0.2% to $1,733.40 an ounce.
  • In Europe, the Stoxx 600 SXXP, +0.79% and London’s FTSE 100 UKX, +0.60% both advanced 0.8%.
  • Asian equity markets logged gains, with the Shanghai Composite SHCOMP, +0.78% up 0.8%, while Hong Kong’s Hang Seng Index HSI, +0.67% gained 0.7% and Japan’s Nikkei 225 NIK, +0.52% advanced 0.5%.