Here are the most important news, trends and analysis that investors need to start their trading day:
Futures steady after comments from Russia’s top diplomatFed’s Bullard says ‘our credibility is on the line’ to deal with inflationWeek ahead: Wholesale inflation, retail sales data and earningsRussian FM urges more talks with West amid Ukraine tensionsKey U.S.-Canada bridge reopens as Ottawa Covid protests persist
1. Futures steady after comments from Russia’s top diplomat
U.S. stock futures wiped out sharp earlier losses and turned briefly positive to start the new week after Russian Foreign Minister Sergey Lavrov on Monday appeared to suggest Moscow would continue talks with EU and NATO officials over Ukraine. Investors are monitoring the possibility of Russia invading Ukraine and the Federal Reserve raising interest rates more aggressively this year, starting next month.
The 10-year Treasury yield topped 2% last week for the first time since 2019 after Thursday’s biggest 12-month gain in consumer prices since 1982 and again Friday after U.S. Secretary of State Antony Blinken said a Russian “invasion could begin at any time” in Ukraine. The 10-year yield turned positive Monday on the Lavrov comments, pushing back to 1.98%.The Dow Jones Industrial Average on Friday tumbled 503 points, or 1.4%. The S&P 500 dropped 1.9% and the Nasdaq Composite shed 2.8%. All three stock benchmarks were lower for the week.
2. Fed’s Bullard says ‘our credibility is on the line’ to deal with inflation
St. Louis Fed President James Bullard on CNBC on Monday reiterated he’d like to see rates rise by 100 basis points by July. “Our credibility is on the line here,” Bullard added, referring to the need to deal with escalating inflation. He added the Fed should “front-load” tightening. Bullard’s rate call roiled markets Thursday.
There are three regularly scheduled Fed meeting before Bullard’s deadline — in March, May and June. The markets are pricing in about a 55% chance of seven Fed rate hikes this year, according to the CME. The central bank releases minutes from its January meeting Wednesday, with investors watching carefully for any new insights on its rate plans, inflation outlook or balance sheet wind down.
3. Week ahead: Wholesale inflation, retail sales data and earnings
In the week ahead, there’s more key inflation data, with January’s producer price index scheduled for Tuesday. That report is also expected to be very hot, after January’s CPI. Surging inflation has caused consumer sentiment to slump, and now economists are watching consumer spending closely. That means January’s retail sales will be important when that data is released Wednesday.
There’s also a final rush of big earnings, with Cisco Systems and Nvidia on Wednesday; Walmart on Thursday; and Deere on Friday. With more than 70% of the S&P 500 companies already having reported financial results, according to FactSet, over three-quarters of them beat on earnings. However, 47% of S&P 500 names issued negative EPS guidance.
4. Russian FM urges more talks with West amid Ukraine tensions
Lavrov, Russia’s top diplomat advised President Vladimir Putin on Monday to continue talks with the West on Russian security demands amid tensions over Ukraine. The statement by the Russia’s foreign minister appeared to signal the Kremlin’s intention to stay on a diplomatic path even though the U.S. has warned that Moscow could invade Ukraine at any moment.
Speaking at the start of a meeting with Putin, Lavrov suggested Moscow should maintain a dialogue with the U.S. and its allies even though they have rejected Russia’s main security demands. Moscow wants, among other things. guarantees from that NATO won’t allow Ukraine and other former Soviet republics to join.
5. Key U.S.-Canada bridge reopens as Ottawa protest persists
The busiest U.S.-Canada border crossing was open Monday after protesters demonstrating against Covid restrictions blocked the span for nearly a week. The Ambassador Bridge was reopened to traffic Sunday night after police in Windsor, Ontario, arrested 25 to 30 demonstrators and towed several vehicles. After protesters began blocking bridge access Feb. 7, automakers in the U.S. and Canada began shutting down or reducing production. The crossing carries 25% of all trade between the two countries.
While the bridge dispute has been resolved, a larger protest over Covid mitigation measures persisted in Canada’s capital, Ottawa. Pandemic rules have been far stricter in Canada than in the U.S., but Canadians have largely supported them.
— The Associated Press contributed to this report. Sign up now for the CNBC Investing Club to follow Jim Cramer’s every stock move. Follow the broader market action like a pro on CNBC Pro.
