U.S. Stock Futures Fall As Bond Yields Caught Some Investors By Surprise
U.S. stock futures are slated to open lower on Monday after trading sideways on the overnight trading on Sunday. Some could say it’s because COVID-19 deaths surpass the 500,000 mark. But investors are generally concerned over the rapidly rising bond yields in recent weeks. Following the rapid rise of bond yields, this could potentially hurt companies reliant on low borrowing rates. Simultaneously, it also lowers the appeal of buying stocks.
“Yield curves have continued to steepen, as COVID infection rates decline further, reopening plans are discussed and a large U.S. fiscal stimulus package looks likely,” said Christian Keller, Barclays’ head of economics research.
On Monday morning, Dow Jones Industrial Average futures had fallen 177.56 points or 0.54%, while the S&P 500 and Nasdaq Composite futures fell 0.73% and 1.26% as of 6.19 a.m. ET. The increase in bond yields should theoretically signal a better medium-term growth outlook for the U.S. and beyond. While not many share the same views, many on Wall Street do not see the jump in yields as a threat to the bull market.
Powel Testifies Before Congress
Federal Reserve chair Jay Powell is slated to testify before the Senate Banking Committee on Tuesday and the next day at the House Financial Services panel. From recent public appearances, Powell has reiterated that the central bank would maintain an easy monitoring policy. That’s to continue supporting the country’s economy as it emerges from the coronavirus pandemic.
It is possible that Powell may repeat his call for additional fiscal support from Congress during his testimony. In his FOMC press conference in late January, he said that fiscal support would be “absolutely essential” to the economic recovery. Nevertheless, he did not say what the appropriate amount of aid from Congress might be.
“[Powell] will likely note recent progress in the data but reiterate that the economy is far from fully recovered, thereby defending accommodative monetary policy,” Bank of America economist Michelle Meyer said in a note Friday.
Cryptocurrency Stocks In Focus As Bitcoin Hit A Market Cap Of $1 Trillion
If you have been keeping up with the news over the weekend, you would know that Bitcoin had skyrocketed to new highs. That brought the value of all bitcoins to more than $1 trillion. Certainly, institutional players like Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) may have given a boost for crypto adoption. But Tesla’s (NASDAQ: TSLA) $1.5 billion investment in bitcoin using cash on its balance sheet could be sending the strongest signal. Musk also mentioned that consumers could now purchase Tesla with bitcoin. That has definitely strengthened bitcoin’s appeal as a form of payment. Not long after, BNY Mellon (NYSE: BK), Mastercard (NYSE: MA), and BlackRock (NYSE: BLK) also dipped their toes in the water.
As Bitcoin skyrockets to new highs, it wouldn’t hurt to put up a list of cryptocurrency stocks to watch this week. In the larger scheme of things, Bitcoin is no longer unfamiliar to the investing world. What’s more, investors are increasingly receptive to the cryptocurrency. Therefore, you might want to put up a list of cryptocurrency stocks to buy. These stocks have moved along in the past with the price of Bitcoin. Amongst them are Riot Blockchain (NASDAQ: RIOT), Marathon Patent Group (NASDAQ: MARA), and Canaan (NASDAQ: CAN).
Lucid Motors Near Deal To Go Public Via CCIV
Lucid Motors, the electric vehicle startup, is close to a deal to go public through a merger with Churchill Capital Corp IV (NYSE: CCIV). A deal for Lucid could be announced on Tuesday. Investors should also note that the talks remain ongoing and could still fall apart. Now, as there are rumors going on about the closing of the Lucid merger with CCIV stock, it may be wise to keep the stock on your radar. Of course, buying any stock on rumors is particularly risky. But if it turns out to be true, investors could be getting a payday.
For the uninitiated, Lucid Motors is an electric vehicle (EV) company with a premium focus. According to Bloomberg, such a deal could give a valuation of $15 billion to the EV maker. It is also worth mentioning that Lucid has strong backing from the Saudi Arabian sovereign wealth fund. If anything, it is not very common for EV start-ups to receive investments from deep-pocketed sovereign funds.
Apart from the company having some strong institutional backings, Lucid is already preparing to start deliveries. That sets it apart from some of the SPACs which are still at the design stage. In December 2020, Lucid completed the initial phase of its manufacturing facility in Arizona. The initial annual capacity is 30,000 units. It expects to begin production of the Lucid Air this spring. The facility will eventually expand to a capacity of 400,000 vehicles.
Yet Another Week Of Earnings In Store
Wall Street is looking at another week full of earnings reports. Amongst them, there are two big names reporting their earnings for the first time as public companies. They are Airbnb (NASDAQ: ABNB) and DoorDash (NYSE: DASH). Both are offering a fresh look at the businesses following their massive public debuts.
There are some big names from the technology sectors reporting this week. They include NVIDIA Corp. (NASDAQ: NVDA), Salesforce.com (NYSE: CRM), Palo Alto Networks (NYSE: PANW), Teladoc (NYSE: TDOC), and Etsy (NASDAQ: ETSY). Apart from the tech space, there are also other notable names from the retail and biotech space that many investors are watching. They are Home Depot (NYSE: HD), Domino’s Pizza (NYSE: DPZ), Moderna (NASDAQ: MRNA), and Beyond Meat (NASDAQ: BYND)
So, whether it is the direction of the monetary policy, chasing cryptocurrency stocks amid high bitcoin prices, speculating whether Lucid could close the deal with CCIV, or looking at a barrage of corporate earnings, there is a lot to digest as we start the week.