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Monday proved to be a mixed day for U.S. equities with the Dow Jones and S&P falling back by 0.4% each while the Nasdaq struggled to another small gain, up 0.2%. However, with all three major indices opening the week only modestly down on last week’s record closes there is still plenty of optimism that each will chart fresh heights before the end of this week. Much will depend upon how markets react to Trump’s speech tomorrow in which he is expected to provide further details on his administration’s intended international trade, taxation and infrastructure spending policies. With earnings season also getting underway a positive or negative trend to corporate results will also go a long way to setting the trend for U.S. equities and indices over the first couple of months of 2017.
Futures are currently suggesting that all three indices will open Tuesday’s session roughly flat on their Monday closing positions. The U.S. dollar is up against the British pound by 0.2%, currently at $1.214. The pound fell by more than 1% against the dollar yesterday. The Wall Street Journal Dollar Index starts Tuesday 0.1% up.
Global inflation, now long predicted by economists, is showing signs it is picking up pace. The WSJ quotes global market strategist Nandini Ramakrishnan of J.P. Morgan Asset Management as commenting:
“Inflation is now picking up towards those 2% targets in the U.S. and U.K., and it’s heating up at a faster pace in emerging markets too…this inflation is quite healthy for U.S. equities, particularly some sectors like banks and financials”.
In terms of where we can expect the major U.S. indices to go from here, it is worth looking at a recent commentary piece by James Depporre in ‘The Street’. Depporre posits that the fact that the Nasdaq continues to register gains while the Dow Jones and S&P are struggling to gain any new traction indicates that a small number of tech giants such as Facebook, Alphabet and Tesla trending up is masking what is happening in the ‘greater bulk of the market’.
In individual company news, Yahoo will feature prominently today with management changes to be announced as Marissa Mayer prepares to leave the company’s board and a name change to Altaba on the cards after it sells its core internet business to Verizon. The renamed company’s remaining assets will include a stake in Alibaba and Yahoo Japan.
