Dow futures creep higher with big inflation and earnings reports, Powell confirmation on tap

Traders work on the floor of the New York Stock Exchange (NYSE) on January 07, 2022 in New York City.
Spencer Platt | Getty Images

Dow futures nudged higher early Monday after a rocky start to 2022 for equity markets as interest rates rise.

Futures tied to the Dow Jones Industrial Average rose 27 points. S&P 500 futures and Nasdaq 100 futures were little changed.

Investors readied for a big week that will include key inflation data as well as a confirmation hearing for Federal Reserve Chairman Jerome Powell.

The consumer price index is set for release Wednesday and is expected to show a year-over-year increase of 7.1%, according to Dow Jones estimates. The producer price index, which measures wholesale prices, is slated for Thursday.

Powell is scheduled to testify Tuesday at his nomination hearing before a Senate panel, while the hearing on Fed Governor Lael Brainard’s nomination to the post of vice chair is set for Thursday. While both are expected to be confirmed, the hearings could provide key information about the future of monetary policy.

Earnings season also kicks off this week. The S&P 500 is expected to show a growth rate of 21.7%, which would be the fourth straight quarter above 20%, according to FactSet.

Financial heavyweights JPMorgan Chase, Citigroup and Wells Fargo release quarterly results Friday.

The three major stock averages all fell in the first week of the year. The S&P 500 slid 0.4% on Friday for its first four-day losing streak since September. The Nasdaq Composite dropped 0.9%, also posting four straight losing days. The Dow Jones Industrial Average lost 4.81 points.

Stocks, particularly high-growth names, have struggled as interest rates tick higher. The 10-year Treasury yield topped 1.8% on Friday, on a run after closing 2021 at the 1.51% level.

“As we kick-started 2022 this week, trading attention fell on a definitive rotation into value and pro-cyclical stocks and out of growth as investors digested a sharply higher rate environment,” Goldman Sachs’ Chris Hussey said in a Friday note.

The rising rates come as the Fed signaled it could dial back its easy monetary policy more aggressively than some expected. Markets are now pricing in about a 50-50 chance the central bank could raise interest rates four times in 2022, a more hawkish path than had been anticipated prior to the release last Wednesday of minutes from the December policy meeting.

Government bond yields continued their striking move higher, with the benchmark 10-year Treasury note most recently at 1.77%.

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