From the Wall Street Journal’s “Stock Futures Tick Higher Ahead of Economic Data” posted early Wednesday:
Markets have seesawed this week as investors mulled signs that the global economic recovery may take longer than anticipated because of rising Covid-19 cases and extended lockdowns in many countries. Money managers are also assessing the rich valuations on stocks after the major indexes climbed over 70% since the pandemic-fuelled rout last March.
“We are now one year into this rally: we’ve seen a massive decline and a massive rally, and my sense is that markets are just going to pause for breath from here,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. “Gains are going to be much harder to come by for the rest of the year.”
Despite Mr. Powell’s comments that the Fed will continue to support the economy until the recovery is more robust, money managers are also betting that inflation will climb sharply, and could spur the central bank to raise interest rates or pare back bond purchases.
Mr. Powell on Tuesday told lawmakers that he doesn’t think fiscal stimulus would have a large or persistent effect on inflation. He also stressed that policy makers could act to tamp down rising price pressures if needed. Investors will be looking to fresh comments from the Fed chairman and Treasury Secretary Janet Yellen at a senate committee hearing at 2 p.m. ET.
“We have a Federal Reserve that has said it is pretty relaxed about inflation and that it will let things run hot for a while,” Mr. O’Reilly said. “You would expect a massive leg up in equites on the back of that, and on the vaccinations going well, but we haven’t really seen that.”
My take: Nothing particularly massive happening this morning.