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Market Snapshot: Dow futures edge lower ahead of economic data as Fed begins 2-day meeting

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Stock-index futures were mixed early Tuesday, as investors awaited U.S. February retail sales figures and other economic data ahead of the start of a two-day Federal Reserve policy meeting.

What are major benchmarks doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.01%

    were down 24 points, or 0.1%, at 32,826.
  • S&P 500 futures ES00 edged up 3.3 points, or 0.1%, to 3,961.50.
  • Nasdaq-100 futures NQ00 were up 72.25 points, or 0.6%, at 13,141.50.

On Monday, stocks ended on a positive note after flipping between modest gains and losses, with the Dow
DJIA,
+0.53%

logging a fourth straight record close, its longest such streak since December 2017, according to Dow Jones Market Data. The S&P 500
SPX,
+0.65%

also closed at a record, rising 0.6%, while the Nasdaq Composite
COMP,
+1.05%

advanced 1%.

What’s driving the market?

Stocks continue to press higher on expectations vaccine rollouts and another $1.9 trillion dose of COVID-19 relief spending by the U.S. government will fuel an acceleration in economic growth and corporate profits in 2021.

“The accelerated pace of vaccinations in America and the imminent spending boom seem to have reawakened a thirst for risk-taking among investors, who are front-running what will probably be a stellar summer in economic data,” said Marios Hadjikyriacos, investment analyst at XM, in a Tuesday note.

“Even the risk of a more hawkish Fed tomorrow appears to have been discounted by market participants,” he said. “Since traders have already priced in an earlier timeline for rate increases, even if policy makers bring forward their rate forecasts to signal a hike in 2023 through the famous ‘dot plot’, that would still be aligned with market pricing and therefore not much of a shock.”

Read: Fed to stay dovish this week as Powell channels his inner Gary Cooper calm

Also see: Investors say regulatory relief for bank capital rules could ease pressure on bond market

The tech-heavy Nasdaq appeared set to outperform as Treasury yields slipped. The recent backup in yields, which saw the rate on the 10-year note rise for six straight weeks, had weighed on the index as it sparked a rotation away from the most highflying stocks of the pandemic toward more cyclically sensitive stocks expected to gain from a wider economic reopening.

The Fed’s two-day meeting was set to get under way Tuesday morning. When it concludes Wednesday, investors expect no changes in policy but will be eager to see updated projections on the economic outlook and the path for interest rates, while Chairman Jerome Powell’s news conference promises to me to be the key economic event of the week.

Market Extra: Fed should ‘switch’ up its playbook and buy more Treasurys, fewer mortgage bonds, urge analysts

U.S. investors have brushed off a sluggish European vaccine rollout, though officials have warned that it was premature to declare victory.

Key Words:They thought that they were home free and they weren’t.’ Fauci says COVID-19 resurgence in Europe is a warning for the U.S.

The U.S. economic calendar features data on February retail sales at 8:30 a.m. Eastern. Economists look for sales to show a monthly fall of 0.1% after a 5.3% jump in January, partly due to severe winter weather. Excluding autos, sales are forecast to rise 0.2% after a January increase of 5.9%. A February import-price index is also due at 8:30 a.m.

“In some ways, the data is a bit irrelevant in the sense that the economy is going to be boosted by the new fiscal stimulus, and funds have already begun to be transferred,” said Marc Chandler, managing director at Bannockburn Global Forex, in a note.

February industrial production and capacity utilization data from the Fed is set for release at 9:15 a.m. Economists look for production to rise 0.5% after a 0.9% rise in January; utilization is expected to rise to 75.8% from 75.6%.

The March National Association of Home Builders index is due at 10 a.m.

Which companies are in focus?
What are other markets doing?
  • The ICE U.S. Dollar Index
    DXY,
    -0.15%
    ,
    a measure of the U.S. currency against a basket of six major rivals, was off 0.1%.
  • Oil futures were lower, with the U.S. benchmark
    CL.1,
    -1.30%

    off 1.5% at $64.42 a barrel.
  • Gold futures
    GC00,
    +0.15%

    edged higher, rising 0.2% to $1,733 an ounce.
  • In Europe, the Stoxx 600
    SXXP,
    +0.60%

    rose 0.6%, while London’s FTSE 100
    UKX,
    +0.85%

    advanced 0.7%.
  • Asian equity markets logged gains, with the Shanghai Composite
    SHCOMP,
    +0.78%

    up 0.8%, while Hong Kong’s Hang Seng Index
    HSI,
    +0.67%

    gained 0.7% and Japan’s Nikkei 225
    NIK,
    +0.52%

    advanced 0.5%.
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