By Peter Nurse
Investing.com - U.S. stocks are seen opening mixed Monday, with tech stocks underperforming as investors reposition after the Federal Reserve’s hawkish turn.
At 7 AM ET (1200 GMT), the Dow Futures contract was up 240 points, or 0.7%, S&P 500 Futures traded 18 points, or 0.4%, higher, while Nasdaq 100 Futures dropped 22 points, or 0.1%.
The major indices all slipped back last week as investors digested the potential economic damage from the Omicron Covid-19 variant as well as the Federal Reserve indicating it could speed up its tapering later this month given the high rate of inflation.
The Dow Jones Industrial Average recorded a fourth straight negative week for the first time since September 2020, while the S&P 500 and the Nasdaq Composite were both down for a second consecutive week.
The Omicron variant of the coronavirus has spread to about one-third of U.S. states, U.S. health officials said on Sunday, but early indications suggest the symptoms associated with this variant could be relatively mild.
President Joe Biden’s chief medical advisor Anthony Fauci told CNN in a weekend interview that “it doesn’t look like there’s a great degree of severity to it,” adding that existing vaccines appear to offer a still-high degree of protection against it.
Strategists at Morgan Stanley indicated in a note that they are “not that concerned about omicron as a major risk factor for equities.” Instead, it’s the Fed that investors need to concentrate on as “tapering is tightening for the markets and it will lead to lower valuations like it always does at this stage of any recovery.”
In corporate news, Kohl's (NYSE:KSS) will be in the spotlight after a report in The Wall Street Journal said an activist investor is urging the department-store chain to consider a sale or a separation of its faster-growing e-commerce business.
Alibaba (NYSE:BABA) will also be in focus after the Chinese retail giant said it plans to reorganize its international and domestic e-commerce businesses.
Crude prices climbed Monday after Saudi Arabia, the world’s top oil exporter, raised the price for its oil heading to the U.S. and Asia by up to 80 cents from the previous month, an indication of its confidence in the strength of demand in the two regions.
By 7 AM ET, U.S. crude futures traded 3.5% higher at $68.58 a barrel, while the Brent contract rose 3.2% to $72.13. Both benchmarks fell last week for their sixth week in a row for the first time since November 2018 on concerns that the new coronavirus variant could hit fuel demand.
Additionally, gold futures fell 0.2% to $1,780.80/oz, while EUR/USD traded 0.2% lower at 1.1293.