The market looks ready to rebound after yesterday’s sell-off.
All Eyes On Treasury Yields
S&P 500 futures are moving higher in premarket trading as Treasury yields continue to pull back from their recent highs.
Higher yields put significant pressure on stocks during yesterday’s trading session, and S&P 500 closed down by 2.45%. Today, the market gets some support from falling yields as the yield of 10-year Treasuries declined from 1.56% to 1.46%.
However, stronger dollar may present a problem as it puts pressure on commodity markets. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has managed to get above the resistance at 90.50 and is moving towards the next resistance level at the 50 EMA at 90.65.
Yesterday, the U.S. Dollar Index made an attempt to settle below the 90 level, so the current rebound is strong. Not surprisingly, stronger dollar puts pressure on gold and silver , so miners’ stocks will likely find themselves under pressure at the beginning of the trading session.
Oil Pulls Back Towards The $62 Level
WTI oil is down by about 2% as traders evaluate their positions after the recent rally. WTI oil has recently reached pre-pandemic highs as stimulus optimism and additional production cuts from Saudi Arabia provided support to the market.
The cold weather in Texas, which disrupted oil production, served as an additional catalyst. Meanwhile, demand is still far below the levels seen before the pandemic so traders will likely become more cautious about opening new positions without additional positive catalysts.
Personal Income Grew By 10% In January
The U.S. has just released Personal Income and Personal Spending reports. Personal Income increased by 10% month-over-month in January compared to analyst consensus which called for growth of 9.5%. Personal Spending grew by 2.4% compared to analyst consensus of 2.5%.
It remains to be seen whether strong growth of Personal Income will be able to provide additional support for the market as Personal Spending report indicated that consumers remained cautious despite significant income growth.