Stock Market Today: Stocks Mixed As Hawkish Fed Blunts China Covid Hopes

Hawkish Fed comments are likely to keep hopes of a change in China’s Covid policy from seeping in to early trading on Wall Street.

U.S. equity futures were mixed Tuesday, while the dollar drifted lower against its global peers and Treasury yields stabilized, as investors looked for a change in China’s strict Covid health policies following rare weekend protests in the world’s second-largest economy.

Security remains tight in major Chinese cities, however, and comments from high-ranking officials in Beijing, including from the National Disease Control and Prevention Administration, suggest a greater chance of fine-tuning than a complete overhaul of rules related to quarantine, vaccination and domestic travel.

Still, stocks in China were traded firmly higher in the overnight session, helping the region-wide MSCI ex-Japan index rise 2.38% heading into the close of trading as overall sentiment improved and reports of a renewed push for the vaccination of older citizens began to emerge.

The moves helped push the U.S. dollar index 0.32% lower against a basket of its global peers to 106.342 and held benchmark 10-year U.S. Treasury note yields in place at 3.70% in early New York trading. In Europe, the Stoxx 600 was up 0.31% in mid-day Frankfurt trading while Britain’s FTSE 100 gained 0.77% in London.

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A series of comments from Federal Reserve officials yesterday, however, are likely to blunt any follow-through from the Asia session, with each indicating that interest rates are likely to remain elevated for nearly all of next year as the central bank remains focused on its efforts to tame the fastest inflation in four decades.

“I’m very supportive of the path that is slower, probably longer and potentially higher,” Richmond Fed President Thomas Barkin told Bloomberg TV late yesterday.

The CME Group’s FedWatch is still pricing in a 70% chance of a 50 basis point rate hike next month in Washington, with the bulk of betting focused on a Fed Funds rate that will peak between 5% and 5.25% in the spring of 2023.

Consumers appear willing to mount their own inflation fight, however, after spending a record $11.6 billion during yesterday’s ‘Cyber Monday’ sales, an 8.5% increase from last year, as value-focused buyers delayed the bulk of their shopping to the final day of the traditional holiday period.

Adobe Analytics, which compiles the data, said the Monday tally this week as consumer continue to hunt for online bargains amid decades-high inflation. 

On Wall Street, futures linked to the S&P 500 are priced for a modest 5 point opening bell gain ahead of November consumer confidence data and September house price index figures later in the session. Futures linked to the Dow Jones Industrial Average are indicating a 10 point dip while the tech-heavy Nasdaq is priced for a 35 point gain.

Elsewhere, hopes of easing Covid restrictions in China, coupled with more speculation of a production cut from OPEC members when they meet next week in Vienna, boosted global oil prices, with Brent contracts for January delivery rising $2.38 to $85.57 per barrel and WTI futures for the same month jumping $1.84 to $79.07 per barrel.

UnitedHealth Group  (UNH) – Get Free Report shares slipped 0.05% lower in pre-market trading after it forecast softer-than-expected 2023 profits ahead of an investor conference later today in New York.

Walt Disney  (DIS) – Get Free Report shares edged 0.44% higher following comments from returning CEO Bob Iger late yesterday that suggested no major changes in strategy for the media and entertainment giant.

Roku  (ROKU) – Get Free Report shares fell 3.9% after analysts at KeyBanc Capital Markets lowered their rating on the streaming service hub and connected TV maker, citing ad market weakness and the group’s hardware investment plans.

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