Stock futures were flat in overnight trading ahead of Tuesday’s consumer confidence data and a big week for economic data.
Futures on the Dow Jones Industrial Average and S&P 500 were flat, while Nasdaq 100 futures inched 0.1% lower.
During Monday’s regular trading session, the Dow Jones Industrial Average rose 94.65 points or 0.27%. The S&P 500 climbed 0.7%, while the Nasdaq Composite gained 1.31%.
The gains came amid a tech-heavy market rally during regular trading led by shares of Tesla, which rose 8% on news that it will ask shareholders to split its stock to pay dividends to investors.
“I think anyone has to be impressed with the resiliency of the market and I go back to there is no alternative,” Erin Browne, PIMCO’s managing director and portfolio manager told CNBC’s “Closing Bell: Overtime” on Monday. “Do you want to invest in bonds when you know that the Fed is raising rates or do you want to invest in equities where you can get some type of dividend return, you can get real earnings growth and it’s gonna give you a comfortable return in your portfolios?”
Meanwhile, the 5-year Treasury note rose above the 30-year on Monday, marking the first inversion since 2006. The shift stoked some recession fears, although economists typically watch the spread between the 2-year and 10-year rate, which remains positive.
Oil prices, which have fluctuated in recent weeks amid the ongoing geopolitical tensions abroad, fell on Monday. Both U.S. West Texas Intermediate (WTI) crude futures and Brent crude futures slid about 7%, settling at $105.96 and $112.48 per barrel, respectively. The slide led energy stocks such as Chevron to tumble.
Market watchers continue to monitor the ongoing war between Russia and Ukraine as peace talks are set to continue in Turkey. Meanwhile, investors are also watching the Fed, as more Wall Street banks pencil in half-point increases after chair Jerome Powell indicated that more aggressive hikes are possible.
Investors are awaiting consumer confidence and home price data to be released Tuesday, ahead of Friday’s monthly jobs report. Economists expect to see 460,000 jobs added in March and the unemployment rate to fall to 3.7%, according to Dow Jones estimates.
IMF hikes global growth forecast as inflation cools
The IMF has revised its global economic outlook upwards.
Norberto Duarte | Afp | Getty Images
The International Monetary Fund on Monday revised upward its global growth projections for the year, but warned that higher interest rates and Russia’s invasion of Ukraine would likely still weigh on activity.
In its latest economic update, the institution said the global economy will grow 2.9% this year — which represents a 0.2 percentage point improvement from its previous forecast in October. However, it said that number would still mean a fall from an expansion of 3.4% in 2022.
It also revised its projection for 2024 down to 3.1%.
“Growth will remain weak by historical standards, as the fight against inflation and Russia’s war in Ukraine weigh on activity,” Pierre-Olivier Gourinchas, director of the research department at the IMF, said in a blog post.
The Fund turned more positive on the global economy due to better-than-expected domestic factors in several countries, such as the United States.
“Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe,” Gourinchas said, also noting that inflationary pressures have come down.
In addition, China announced the reopening of its economy after strict Covid-19 lockdowns, which is expected to contribute to higher global growth. A weaker U.S. dollar has also brightened the prospects for emerging countries that hold debt in foreign currency.
However, the picture isn’t totally positive. IMF Managing Director Kristalina Georgieva warned earlier this month that the economy was not as bad as some feared, “but less bad doesn’t quite yet mean good.”
“We have to be cautious,” she said during a CNBC-moderated panel at the World Economic Forum in Davos, Switzerland.
The IMF on Monday warned of several factors that could deteriorate the outlook in the coming months. These included the fact that China’s Covid reopening could stall; inflation could remain high; Russia’s invasion of Ukraine could shake energy and food costs even further; and markets could turn sour on worse-than-expected inflation prints.
IMF calculations say that about 84% of nations will face lower headline inflation this year compared to 2022, but they still forecast an annual average rate of 6.6% in 2023 and of 4.3% in 2024.
As such, the Washington, D.C.-based institution said one of the main policy priorities is that central banks keep addressing the surge in consumer prices.
“Clear central bank communication and appropriate reactions to shifts in the data will help keep inflation expectations anchored and lessen wage and price pressures,” the IMF said in its latest report.
“Central banks’ balance sheets will need to be unwound carefully, amid market liquidity risks,” it added.
Most Adani shares continue losses; founder loses $28 billion in month
Gautam Adani, chairperson of Indian conglomerate Adani Group, at the World Congress of Accountants in Mumbai on Nov. 19, 2022. Founder Gautam Adani, the richest man in Asia and once second only to Elon Musk, fell out of the world’s top five richest to rank seventh on the Bloomberg’s Billionaire Index.
Indranil Mukherjee | Afp | Getty Images
Shares of most of Adani Group companies continued to see sharp losses for a third consecutive trading session as the company attempted to rebut short seller firm Hindenburg’s report, which accused the conglomerate of stock manipulation and an “accounting fraud scheme.”
Adani Enterprises erased earlier gains of up to 10% and last traded flat in Mumbai’s afternoon trade after the group published a lengthy response of over 400 pages to Hindenburg’s report over the weekend, saying that it will exercise its rights to “pursue remedies” to protect its investors “before all appropriate authorities.”
Adani Enterprises’ stock price remains more than 25% lower in the month to date, Refinitiv data showed. It proceeded with a secondary share sale worth $2.5 billion, which were overshadowed by a rout that wiped out a total of $48 billion as of last week’s close.
His net worth fell $27.9 billion year to date, the index showed. It peaked at $150 billion on Sept. 20, 2022, before falling to to $92.7 billion as of last week’s close, according to the index.
Despite small gains seen in Adani Enterprises, other affiliates of the Adani Group continued to plunge.
Adani Group said Hindenburg’s allegations were a “calculated attack on India, independence, integrity and quality of Indian institutions, and growth story and ambition of India,” in the response it released over the weekend.
The group’s chief financial officer Jugeshinder Singh said in an interview with CNBC-TV18, an affiliate of CNBC, that the value of Adani Enterprises has not changed “simply because” of share price volatility, adding it instead lies in its “ability to incubate new businesses.”
He added that he is confident Adani Enterprises‘ follow-on public offering will be fully subscribed, calling Hindenburg’s report “simply a lie” and the timing of the report “malicious.”
Hindenburg on Monday morning described the group’s response “bloated” and claimed it “ignores every key allegation” against the conglomerate that it raised.
“Fraud cannot be obfuscated by nationalism of a bloated response that ignores every key allegation we raised,” the short seller titled its response to Adani Group.
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