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US index futures traded virtually unchanged on Wednesday, as investors and traders took a break after the rally observed yesterday. Many are analyzing the reports of major retailers Target and Lowe's, and are also waiting for statements from representatives of the Federal Reserve System. Futures on the Dow Jones Industrial Average fell by 14 points, while the S&P 500 and Nasdaq 100 were virtually unchanged.
Yesterday's market strengthening was facilitated by data, which shows that American consumers continued to increase their spending before the big holidays due to fears of problems with goods as a result of supply chain disruptions. Reducing fears of contracting coronavirus has also led to stimulating spending by US residents, even despite the high inflationary pressure that has been observed recently. On Tuesday, the Commerce Department reported that retail sales rose 1.7% in October, much more than economists had expected. At the end of yesterday, the Dow added 54.77 points or 0.15%. The S&P 500 rose 0.39%, and the Nasdaq Composite jumped 0.76%.
Home Depot's strong quarterly results yesterday also had a positive impact on investor sentiment. The home goods retailer led the Dow's gains after the company's profit exceeded analysts' estimates.
TJX, Bath & Body Works, and Victoria's Secret will report today. Cisco Systems and Nvidia will attract attention from the technology sector.
Given that the release of important fundamental statistics is not planned for today, many market participants will focus their attention on interviews with representatives of the Federal Reserve System, who, most likely, will continue to assess the observed inflationary pressure. Hawkish statements by many leading Central Bank policymakers this week have already caused a stir, which led to a major rise in the dollar. However, so far the risk of an earlier rate hike in the US does not affect the desire of investors to reduce their investments in the stock market. On the contrary, strong economic growth only increases their appetite.
Now let's run through the premarket and talk about company news.
Tesla securities rose by about 1% in the premarket. Demand for shares persisted even after founder and CEO Elon Musk sold some of his shares to meet tax obligations.
The securities of another manufacturer of electric cars (Rivian) fell by almost 5% in the premarket. On average, the company's shares show an increase of 15% per day. The IPO price was $ 78, and yesterday the auction closed at $ 172.01.
But Visa shares were less fortunate. They fell by about 3.6% after Amazon said it would stop accepting payments with Visa credit cards issued in the UK starting in January next year. The reason is Visa's high fees for processing credit card transactions. Earlier this year, Visa raised its fees, which are charged to merchants for processing digital transactions between the UK and the European Union. It's all the fault of the new Brexit agreement, in which the EU restriction on interbank fees no longer applies in the UK – this allows company owners to independently set commissions within the network. Let me remind you that Mastercard has also increased the commission for transferring funds between the UK and the EU.
Among the leaders of the fall, Target can be singled out, which, after the publication of the report, noted some pressure on margins due to rising costs associated with problems in supply chains and compensation for additional costs. Against this background, shares in the premarket fell by 3.3%.
Boeing shares rose almost 2% in the premarket after the company received a $ 9 billion order from Akasa Air for its 737 MAX.
Today there was also news that the FDA promised to conduct a quick review of the application for approval of the Pfizer/BioNTech booster vaccine from COVID-19 for all adults. The decision can be made tomorrow. Against this background, BioNTech shares in the premarket rose by 1.3%, and Pfizer - by 0.7%.
As for the technical picture of the S&P 500 index
It is gradually returning to its historical highs - in the area of $ 4,718, as investors are counting on a more positive end to this year and on maintaining the soft policy of the Federal Reserve System. The level of $ 4,660 continues to act as support, the breakthrough of which will lead to increased pressure on the trading instrument and a larger drop in the index - to the area of $ 4,609 and $ 4,551. A breakthrough of $ 4,718 will open the way to $ 4,750 and $ 4,775.
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