Five things you need to know before the market opens on Tuesday, January 10:
1. — Stock futures slide lower on hawkish Fed signal
U.S. equity futures fell lower on Tuesday, extending a move from late yesterday that dented gains on Wall Street as investors continued to worry that a Eagle Federal Reserve will challenge the market consensus on a slowdown inflationary and cut interest rates in 2023.
Fed Presidents Mary Daly and Raphael Bostic doubled down on the central bank’s view that inflation is still too far from their preferred 2% target to consider rate easing, Daly told the Wall Street Journal that she can make arguments “for both sides” in the debate about whether a 25 base point or a 50 basis point rate hike would suit the Fed later this month and emphasize that he needs to make sure inflation doesn’t take root in the economy.
Curiously, the CME Group FedWatch continues to suggest a 77.2% chance of a 25 basis point rate hike later this month, a move that would make both Fed funds rate range from 4.5% to 4.75%, and the bond market continued to recover following Bostic and Daly’s comments.
Benchmark 2-year Treasury yields were last seen holding at 4.231% overnight and trending towards September lows of 4.15%, with 10-year yields falling down 3.552%.
The US Dollar Index, which tracks the greenback against a basket of global currencies, is up 0.14% from yesterday’s levels – a six-month low – to change hands at 103.143 in the past trade. night.
However, stocks were quick to react and remain sensitive to the top risk associated with both Fed policy and the inflation outlook on Thursday. CPI read and speech by Fed Chairman Jerome Powell before the start of trading.
On Wall Street, futures are tied to S&P 500 are priced for a 3.5-point drop at the open, while those linked to the Dow Jones Industrial Average are set for a 60-point drop. The tech-focused Nasdaq, which is on track for a fifth straight week of losses, is looking at a 2-point drop.
In overseas markets, the MSCI non-Japan index across the region was down 0.27% in late trade, while Europe’s Stoxx 600 was 0.74% lower at the start of the Frankfurt session. London’s FTSE 100 is down 0.27%.
2. — Powell’s speech focused on the Tight Road odds bet test
Federal Reserve Chairman Jerome’s Powell’s speech at a central bank conference in Sweden, just two days before an important reading on domestic inflation, will likely be the main focus for traders at the start of trading on Tuesday.
Powell, who is scheduled to speak at the Sveriges Riksbank International Symposium on Central Bank Independence in Stockholm at 9:00 a.m. EST on Tuesday, stressed the need for ‘the dependent on data’ in tracking both inflation dynamics and the Fed’s response function, arguing last month that allowing price pressures to deepen into the economy would do more harm than increase the interest rate needed to tame it.
However, the core inflation rate is forecast by some to fall to as low as 2.5% by the end of June, just a month after the Fed essentially promised to increase if the Fund’s benchmark rate The Fed is between 5% and 5.25%. .
That path, alongside slowing growth and a weakening labor market, may force the Fed to change tactics, but Powell has remained steadfast in previous months on the Fed’s inflation targets and has resisted. market expectations about policy easing.
“Our focus right now is really on shifting our policy stance to one that is restrictive enough to ensure inflation returns to our 2% target over time, not cutting back.” cut rates,” Mr. Powell told reporters in Washington last month.
3. — Pfizer can sell Covid drugs in China through local partners
Pfizer (PFE) – Get a free report shares edged higher in pre-opening trading, leading to a sharp drop in shares on Monday, after the drugmaker said it could work with a local partner in China to selling anti-viral drug Paxlovid for Covid.
Speaking at JPMorgan’s healthcare conference in San Francisco, CEO Albert Bourla said that although the drugmaker has not discussed with Beijing to sell Paxlovid directly, it could sell the treatment method. value to the world’s largest market through a local production agreement.
China’s Health Security Administration said on Sunday that it would not include Paxlovid on a list of drugs it would cover through basic health insurance, saying Pfizer’s listed prices were too high. Pfizer will likely record $22 billion in annual Paxlovid revenue for the whole of last year.
Shares of Pfizer were marked 0.1% higher in pre-opening trading, after plunging 4.97% yesterday, to indicate an opening price of $48,430 per share.
4. — Oak Street Health soars on reported $10 billion CVS takeover
Oak Street Health (OSH) – Get a free report shares edged higher in pre-market trading after a report showed the primary care center operator was willing to agree to a $10 billion takeover by CVS Health (CVS) – Get a free report.
Bloomberg reported late Monday that CVS, which is expanding into healthcare as retail sales growth slows, has been in talks with Chicago-based Oak Street, which will list listing shares in 2020.
The deal, for both equity and debt of Oak Street, is likely to raise more than $10 billion if completed and adds to CVS’s recent acquisition of Signify Health and the Aenta deal. $69 billion in 2017.
Oak Street Health shares were marked 35.1% higher in pre-market trading to indicate an opening price of $30.49 per share, a move that would fix the equity value. group ownership at about $7.4 billion.
5. — Microsoft says it’s eyeing a $10 billion OpenAI investment
Microsoft (MSFT) – Get a free report Stocks edged higher in pre-market trading after reports that the tech giant was looking to buy a large stake in OpenAI, an artificial intelligence group led by Tesla TSLA CEO Elon Musk create.
Semafor has reported that Microsoft will invest $10 billion in OpenAI, the creator of the ChatGPT chatbot, in a deal that values the San Francisco-based consortium at around $29 billion.
As Semafor reports, Microsoft will cash back OpenAI’s profits under the terms of the deal, and then eventually own a 49% stake in the corporation.
This investment will mark the second time Microsoft has pumped money into OpenAI, following a $1 billion infusion in 2019 and other media reports that have suggested that ChatGPT could be used in a new version of the search engine. Bing search of the tech giant.
Microsoft shares were marked 0.26% higher in pre-market trading to indicate an opening price of $227.70 per share.
