The Day Ahead: Stocks Continue to Tick Higher Before PPI and Fed Speak
Despite yesterday’s news that housing starts fell nearly 6% in February (led by weakness in multi-family starts), stock markets managed to move upwards yesterday and this morning that upward trend continues. Sentiment was in part bolstered from the language of the FOMC statement, wherein the central bank said it would maintain "low levels of the federal funds rate for an extended period" and the "labor market was stabilizing".
Two hours before the opening bell, Dow futures are up 30 points to 10,654 and S&P 500 futures are 3.75 points higher at 1,158.50.
With equities up, the US dollar is looking weaker. Meantime, the Euro rose overnight and the pound was the top performing currency.
Commodities are also heading upwards with WTI crude oil 79 cents higher at $82.49 per barrel and Spot Gold up $3.90 to $1,131.60. Later today the US Energy Information Administration will release the latest inventory report.
Speaking yesterday, Treasury Secretary Timothy Geithner reiterated there was “no way” Moody’s or other credit rating agencies would downgrade the triple-A status of the US.
“There's no way that's going to happen,” Geithner said according to Reuters, adding that the administration was working to lower the deficit “dramatically” over the next five years.
“There's not a chance that that's going to happen to this country but it's very important for people to recognize that ... this recovery will be weaker if we don't do a better job together over time of demonstrating that we're going to have the political will to make tough choices.”
Key Events Today:
8:30 ― Economists anticipate the Producer Price Index to deflate by 0.2% in February, after a whopping 1.4% increase in the prior month. The downward shift is caused by falling energy prices as fuel oil prices fell about 7% in the month. The core index, which excludes energy and food prices, is set to inch up 0.1%.
“Production is picking up as the recent inventory cycle expires, and materials prices are rising, but pricing power for finished goods is limited,” said economists at IHS Global Insight.
1:45 ― Richard Fisher, president of the Dallas Fed, will give the opening speech at a conference called “The Euro and the Dollar in the Crisis and Beyond” in Dallas. At 4pm Fisher will also participate in a panel called “Learning From Each Other in Crisis Response.”
2:00 ― Ben Bernanke, chairman of the Fed, and Paul Volcker, head of Obama’s Economic Recovery Advisory Board, testify before the House Financial Services Committee. The hearing it entitled, “Examining the Link Between Fed Bank Supervision and Monetary Policy.”
According to Bloomberg News, Volcker will say in his testimony that “neither monetary policy nor the financial system will be well served if our central bank is deprived from interest in, and influence over, the structure and performance of the financial system.”
Bloomberg also said Bernanke will say the central bank is “uniquely suited” for supervision of financials and that this role “improves monetary policy.”