Sun. Nov 27th, 2022

Strategas' Chris Verrone on the average stock vs. the broader market

Stock futures were higher Tuesday morning after ending the day lower, snapping a two-day advance that started when a better-than-expected inflation report stoked hopes that the Federal Reserve would soon ease up on raising interest rates.

Futures tied to the Dow Jones Industrial Average rose 117 points, or 0.35%. S&P 500 futures and Nasdaq-100 futures gained 0.46% and 0.71%, respectively. Taiwan Semiconductor, Louisiana-Pacific and Paramount jumped after regulatory filings showed that Warren Buffett’s Berkshire Hathaway had bought new positions in the first two, and raised its stake in the last.

Investors also watched for filings to see what major investors Michael Burry, Bill Ackman, David Tepper and others bought or sold through the third quarter.

Stocks whiplashed during the day Monday on comments from Federal Reserve leaders Lael Brainard and Chris Waller about rate hikes going forward. While Brainard said the central bank could ease off rate increases, Waller said the market was overly optimistic and should brace for higher rates.

“After last week’s CPI undershoot prompted a huge equity rally & reversal in the Dollar, the critical topic for markets this week will be the Fed’s reaction,” wrote Huw Roberts, head of analytics at Quant Insight, in a Monday note.

He added that the degree to which speakers this week push back or endorse the market’s recent moves “will be critical.”

Stocks slipped later on a report that Amazon will lay off about 10,000 employees, potentially starting this week.

Markets will get more inflation information on Tuesday when the producer price index, a measure of wholesale inflation, is released. Investors will also study comments from Philadelphia Fed President Patrick Harker, Fed Governor Lisa Cook and Fed Vice Chair for Supervision Michael Barr.

Earnings season continues this week with retail reports on deck. Walmart and Home Depot release results Wednesday while Target, Lowe’s, Bath and Body Works, Macy’s, Kohl’s and Foot Locker report later in the week.



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