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Stock futures are higher as of 0630. Tech stocks are leading the way, with the Nasdaq up 0.6%. The S&P 500 and Russell 2000 are pointing to gains of 0.4% at the open. Dow Industrials are up 0.1%. Bond markets are closed.
The catalyst for this appears to be news out of China. The Wall Street Journal reports that the country’s regulators are considering easing rules on property lending. Softening the ‘three red lines’ would help developers and today stocks and bonds of these companies rallied. Sentiment was further helped by reports that Evergrande had again averted default at the last minute, making payments on several overdue bonds.
It follows a day of selling on Wall Street when a key inflation reading came in hotter than expected. Fed funds futures are now predicting an interest rate hike in July, with a second expected in December 2022. An earnings miss from Disney (DIS) didn’t help. The opportunity to buy the dip did not go unheeded in a different stock, but you have to listen to the podcast for those details.
There are no economic data releases in the U.S. today due to the holiday. Only a few earnings of interest: Fashion house Tapestry (TPR), retailer Dillard’s (DDS), and cosmetics company Sally Beauty (SBH) are due to report before the open at 0930. Electric vehicle maker Lordstown Motors (RIDE) after the close at 1600. At some point we should get Movano (MOVE). So a few things to track post-pandemic consumer trends.
Bottom Line
Not gonna lie, there isn’t an awful lot going on today. The China developments are definitely positive and should help risk appetite. It stands to reason that things will move higher today, but how much remains the question. Volumes should be subdued as it is a national holiday and schools are closed.
Yesterday’s Bottom Line abstained from making a directional prediction as there was too much uncertainty tied to the CPI report. Did predict the CPI would determine the direction of the day, which is indeed what happened as stocks sank after the inflation data came in hotter than anticipated.
Bottom Line Record: 5 wins, 2 losses, 4 abstentions.
The Bottom Line is mostly entertainment and does not claim to be a predictor of stock market performance. It should not be viewed as investment advice.
Positive Developments for China’s Embattled Real Estate Market: Daily Contrarian, Nov. 11