Following last week’s rally, investors appear headed for the sidelines on Monday.
Aside from a disappointing growth forecast out of China over the weekend driving oil prices higher, we have a sparse but solid lineup for the week with comments from Fed Chair Jerome Powell and a jobs update.
Here’s Deutsche Bank, summarizing what’s at stake for the latter: “It’s fairly uncontroversial to say that the latest salary report released on February 3 was a huge moment, and one that kicked off a series of events that the past month has been a struggle for most financial assets, especially bonds. So if you thought the generator of relatively random numbers, payrolls, is mostly overhyped, you haven’t seen anything yet as we approach Friday’s high number,” wrote a team of strategists led by Jim Reid.
However, the recent momentum for the market seems to have spurred one of Wall Street’s most bearish strategists to ease some of the gloom. Us call of the day returns to Mike Wilson, the Morgan Stanley strategist who warned two weeks ago that investors had pushed stocks into a death zone.
In a new note, the strategist points out how the S&P 500
“survived a crucial support test” last week by staying above its much-watched 200-day moving average. Stocks could see some gains in the near term if the dollar and interest rates continue to fall, he said.
Wilson has targeted 4,150 as the next area of resistance for the S&P 500, though he still doesn’t seem ready to give up on that dead zone forecast.
“While this is undeniably positive in the near term, we don’t think it disproves the very poor risk reward many stocks currently offer given valuations and earnings forecasts that we believe remain far too high,” he said.
Wilson, who expects the S&P 500 to end the year at 3,900 — the more bearish end of Wall Street’s comprehensive forecasts — warned in late February that investors had tracked stock prices to “again dizzying heights,” driven by liquidity and greed. . He said expensive valuations meant investors were not being compensated for risk.
Others look slightly past the 200-DMA, like this fund manager noting how difficult the road will be beyond that line in the sand:
Our final word goes to Bill Blain, market strategist at Shard Capital, who has concluded that we are dealing with “directionless markets” and “a very dangerous moment.”
“There is no particular trend or belief that determines prices. The equity bounce is gone. Bonds look tired. All major themes are present, evident in the game; inflation expectations, interest rates, corporate valuations, sovereign debt sustainability, geopolitics and global threats, but there is no particular momentum behind it. That will change in a flash — but how or when we just don’t know,” Blain said in a blog post.
struggling for traction while 10-year Treasury yields
is lower, at 3.919% after briefly rising above 4% last week. Oil prices
fall after China sets a conservative growth target of “around 5%”. The dollars
is slightly higher.
Read also: Here’s what analysts are saying about China’s new growth target.
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Tobacco manufacturer Altria
announced a $2.75 billion deal for e-vapor product maker NJOY.
late Sunday lowered the prices of its Model S and Model X cars to boost sales as the first quarter comes to a close. Stocks don’t do much in premarket trading.
As part of a cost-cutting measure, Amazon
is closing eight of its cashless convenience stores in San Francisco, New York City and Seattle.
Esperion Therapeutics stock
fell 22% when investors questioned data it reported on a cholesterol drug for statin-intolerant patients. Nyxoah stock
climbed 19% after the medical technology company said it hit key regulatory and clinical milestones.
A handful of US-listed Chinese stocks are lower on the heels of that modest growth target. alibaba
are all down 1% or more.
shares soar on a profit swing from the optical network group.
WW International (Weight Watchers)
will report after closing.
announced a six-point safety plan after last month’s derailment of a train in Ohio carrying hazardous materials.
Factory orders should be ready by 10 a.m. in a week that will end with nonfarm wage data, where we’ll see if the January increase was a blip. And Fed’s Powell’s biennial congressional testimony is scheduled for Tuesday and Wednesday.
Read: Powell to talk to Congress about the possibility of more rate hikes, not less
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