Stock Market Today: January 10, 2022
Adam Rosner | 1/10/2022
Before the Bell: The U.S. stock market has been somewhat volatile lately, and it remains to be seen how the new week on Wall Street will unfold. Currently, the S&P 500 futures are trading lower by about 28 points, which suggests some downside pressure at the start of today’s session. Investors will likely be keeping an eye on the evolving pandemic situation, while also watching for developments in the broader economy and corporate sector.
In economic news, the inflation outlook will take center stage this week, with the Consumer Price Index (CPI) for the month of December coming out on Wednesday. Analysts are anticipating that a notable increase in prices will be reported, continuing a pattern that has been developing for some time. The Producer Price Index (PPI) will follow on Thursday, providing additional information on this front. Inflation, previously thought to be transitory, now seems to be quite persistent, with higher prices for goods and services likely reflecting labor shortages and supply-chain disruptions brought on by the coronavirus pandemic. As they monitor these reports, investors will be speculating about the Federal Reserve’s next move. Of note, the central bank has been gradually tapering its asset purchase program, and has suggested that it will lift interest rates this year in an effort to tame inflation—which may be warranted, if unpopular on Wall Street. We expect the Federal Reserve to act in measured ways, so as not to derail the economy or put too much pressure on housing prices and equity asset values.
Elsewhere, the fourth-quarter earnings season is set to begin. At the end of the week, we will hear from a number of large banks and financial institutions, including JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C). Financial businesses tend to be economically sensitive, and these reports will likely receive attention from traders.
On a technical level, the selling that took place last week has pushed the S&P 500 Index back down to its 50-day moving average, located around the 4,675 level. This area is widely watched by technicians and could provide some support, at least temporarily. It should be noted that Wall Street seems to be taking a more conservative approach lately, with traders more mindful of equity valuations. Capital has been moving into the shares of traditional companies that post solid profits and can afford to pay dividends, while high-flying, concept-driven technology stocks have fallen out of favor. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.