Global Courant
Traders on the floor of the NYSE, July 12, 2022.
Source: NYSE
US stock futures were little changed Monday after a broad rally that pushed the S&P 500 to its best week since March and the highest level since August.
Futures linked to the Dow Jones Industrial Average dipped 27 points while S&P 500 futures were flat. Nasdaq-100 futures fell 0.1%.
Oil prices briefly rose more than 2% after Saudi Arabia announced it would further cut production by 1 million barrels per day from July. The news followed a meeting of OPEC and its allies in which the group decided to stick to existing production targets for 2023.
On Friday, stocks rose at the end of the week following strong May job data. The Dow jumped 2.1% for its best day since January. The S&P 500 increased by 1.45%, while the Nasdaq composite climbed 1.1%, posting its sixth straight weekly gain.
“What the market is doing… I think it’s appropriate, but there are things we don’t know yet and the big problem is the Fed,” Mohamed El-Erian told CNBC’s “Squawk Box” on Monday .
Allianz’s chief economic adviser noted that while major concerns about a potentially catastrophic debt default and a broader banking crisis have subsided, the next step depends on the Federal Reserve’s goal of reducing inflation.
“If the Fed deviates from this 2% target because it believes it is the right target, then this economy is going to face a lot of headwinds,” he said. “However, if the Fed recognizes that 2% is the wrong target, then the market is reasonably priced.”
Of course, investors continue to worry about what has so far turned out to be a tight stock market rally in 2023, led by only a handful of technology stocks carrying the rest of the market, and whether there could be a mid-term correction if breadth doesn’t improve.
“The big question is whether the breadth can continue to improve, which could breathe new life into what had been a very small rally,” Yung-Yu Ma, chief strategist at BMO, told CNBC.
