Wall Street manages mostly positive start despite pressure from bond yields

Despite concerns over US Treasury yields, the main indices on Wall Street managed to start mostly higher on Friday morning.

Shortly after the opening bell, the S&P 500 was up 0.43% at 3,845 while the Nasdaq rose 1.01% to 13,251. The Dow Jones Industrial Average was the negative outlier, sliding 0.23% to 31,330 in early deals.

Sentiment may have been lifted somewhat by a rebound in US consumer spending, with data showing a 2.4% rise last month, catalysed by spending on recreational goods, vehicles, food and beverages.

Personal incomes also surged 10% in January after the round of US$600 stimulus cheques made their way into Americans’ bank accounts.

7:35am: Wall Street expected to start lower

Wall Street is expected to follow the lead of other global markets on Friday by opening on the back foot.

Futures are pointing at a negative open for the S&P 500, the Dow Jones Industrial Average and the Nasdaq as stock markets across the world are put under pressure by a surge in ten-year gilt yields, which have touched a one-year high of more than 0.80% this week, despite Fed Chair Jerome Powell confirming interest rates will remain low.

“I expect we’ll see a lot more of this from central banks in the coming weeks if stocks go into freefall. Despite a couple of days of losses, we’re very much not in that territory yet – this is not a taper tantrum – and policymakers may be perfectly comfortable with what’s happening,” said Craig Erlam at OANDA.

“We are heading for a super-charged recovery, after all, thanks to the vaccine rollout and all the fiscal support measures over the last 12 months. Not to mention the desperation of people to escape their now beautifully decorated homes.”

“Investors should not need the central bank to hold their hand much longer and I expect by the end of the year, taper discussions will and should be starting. Of course, a lot can happen in that time and maybe that’s too optimistic at this stage but the point is simple.”

Four things to watch for on Friday:

• Some large caps making an appearance in the earnings diary at the end of the week include energy company Public Service Enterprise Group Inc (NYSE:PEG), sports betting operator Draftkings Inc (NASDAQ:DKNG) and Kansas-focused utility group Evergy Inc (NYSE:EVRG)
• Shares in Pfizer Inc (NYSE:PFE) may also be in focus following a new study that showed the pharma firm’s coronavirus vaccine, made in partnership BioNTech, dramatically reduces transmission of the virus after the first dose
• Also in focus will be accommodation booking platform Airbnb Inc (NASDAQ:ABNB) after the company reported fourth quarter revenues that bear expectations but will still down sharply on the same period a year ago amid a collapse in tourism during the pandemic
• On the macro front, investors will be keeping an eye on US personal income data for January, while the latest Chicago PMI and Michigan consumer sentiment for February may also provide some insight

Story by ProactiveInvestors