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07.02.2023 01:48 PM
US premarket on February 7: US stock market tries to stabilize

On Tuesday, US stock index futures traded slightly higher ahead of comments from Federal Reserve Chairman Jerome Powell that could affect the central bank's rate trajectory. The S&P 500 and Nasdaq 100 indices futures were up 0.2% and 0.1% respectively. The Dow Jones index was trading flat.

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Asia's broad market index rose after the biggest two-day drop in four months. Shares of Baidu Inc. surged after the company announced it would launch a ChatGPT-like bot in March.

The US dollar stabilized against risky assets after another rally, while Treasuries managed to recoup a two-day drop triggered by expectations of a likely future Fed policy tightening after Friday's US labor market data. This fact spoiled the best start of the year for asset yields since 1987.

Today, volatility is likely to spike during Fed Chairman Jerome Powell's speech. Investors will be assessing whether Powell will dampen market optimism about interest rate cuts by the end of 2023 after this year's strong jobs report in January and comments from other Fed officials about the possibility of a higher key interest rate peak than previously expected by policymakers. If Powell does express concern about the state of the labor market, which is not sagging even in the face of such high borrowing costs, markets may decline, and we will see another major sell-off in the S&P 500 and Nasdaq 100 indices.

Meanwhile, the yen rose after the average cash earnings index beat economists' expectations in Japan, reinforcing expectations that the regulator would adjust or abandon its stimulus program under a new governor.

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Adani Group rose slightly, stopping a decline totaling more than $100 billion.

Oil rose for a second session after Saudi Arabia unexpectedly raised oil prices for Asia, indicating confidence in demand prospects. Gold rebounded slightly after two days of major declines.

As for the S&P 500 index, the demand for risky assets remains. The index can continue to grow but it needs to reach above $4,150. In addition, bulls should take control over $4,180, which will allow them to continue the bullish trend. After that, we may expect a more confident spurt to $4,208. At the same time, the trading instrument is unlikely to get above $4,229. If the index declines and the demand is narrowed, bulls will have to protect the level of $4,116. If this level is broken through, the trading instrument may be pushed to $4,090 and $4,064.

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